E-commerce and gaming company Sea (NYSE: SE) announced better-than-expected revenue in Q2 CY2025, with sales up 31.6% year on year to $5.26 billion. Its GAAP profit of $0.65 per share was 6.4% below analysts’ consensus estimates.

Is now the time to buy SE? Find out in our full research report (it’s free).

StockStory’s Take

Sea’s second quarter results were well received by the market, reflecting significant momentum in its core businesses. Management attributed the strong revenue growth to Shopee’s increased order frequency and buyer engagement, as well as expanding digital financial services. CEO Forrest Li highlighted that “all 3 of our businesses have delivered robust healthy growth,” citing Shopee’s continued leadership in Asia and Brazil and improved profitability across segments. Shopee’s advancements in advertising technology and logistics, alongside Garena’s sustained user base for Free Fire, were called out as central to the quarter’s performance.

Looking ahead, Sea’s forward strategy centers on deepening engagement in e-commerce, scaling its financial services, and leveraging content and technology investments in gaming. Management pointed to the rollout of new initiatives like Shopee VIP and instant delivery, as well as further AI integration, as drivers for future growth. CFO Tony Hou noted, “we do expect a long-term trend of EBITDA margin will continue to improve,” while President Chris Feng emphasized opportunities to expand both Shopee’s advertising capabilities and Garena’s use of AI to enhance player experience. Management also acknowledged that ongoing competitive pressures and investments may affect short-term margins, but they remain focused on expanding market share and product offerings.

Key Insights from Management’s Remarks

Management linked second quarter outperformance to improvements in e-commerce monetization, expanding financial services, and the ongoing success of flagship gaming titles, while highlighting strategic investments in technology and logistics.

• Shopee’s advertising revenue surge: Shopee’s adoption of advanced ad technology and AI-driven tools led to a 20% increase in sellers using ad products and a 40% rise in ad spend per seller, driving higher monetization and conversion rates. Management credited these enhancements for an 8% uplift in purchase conversion and a 70 basis point year-on-year increase in the ad take rate.

• Logistics improvements and instant delivery: Shopee reduced logistics costs per order and improved delivery speed across Asia and Brazil, introducing instant delivery in urban centers that enabled some buyers to receive orders within four hours. This operational improvement contributed to higher buyer satisfaction and reinforced Shopee’s market positioning.

• Expansion of Shopee VIP membership: The Shopee VIP program, a paid subscription for exclusive benefits, demonstrated strong early traction in Indonesia, with VIP GMV growing nearly 50% quarter-on-quarter and members showing increased purchase frequency and retention. The program’s rollout to Thailand and Vietnam added to its momentum, reaching two million subscribers by the end of June.

• Digital financial services scaling: Sea Money’s loan book grew over 90% year-on-year, driven by the addition of four million first-time borrowers and expansion across multiple markets. The integration of AI in credit underwriting and new product features such as tier-based pricing and flexible credit limits improved risk management and user penetration.

• Garena’s content and engagement innovation: Garena sustained growth through new content for Free Fire, including the launch of a new map and collaborations with popular IPs like Netflix’s Squid Game. These initiatives fueled a 23% year-on-year increase in bookings and expanded user engagement, supporting Garena’s positioning as a global gaming leader.

Drivers of Future Performance

Sea’s management projects continued growth by focusing on expanding product offerings, boosting user engagement, and leveraging technology to drive profitability and operational efficiency.

• E-commerce innovation and loyalty: The company plans to build on Shopee’s momentum by expanding the VIP membership program to additional markets and enhancing instant delivery services. Management believes these initiatives, combined with further AI-driven advertising and content features, will drive user retention and higher order values, especially among premium buyers.

• Financial services diversification: Sea Money is targeting further growth through deeper integration with Shopee, expansion of loan products, and market-specific risk management strategies. Management noted that there is significant runway in markets like Brazil, where digital finance products are still in early stages, and expects continued adoption to support overall group profitability.

• Gaming content pipeline and AI integration: Garena aims to maintain user engagement through ongoing content updates for flagship games and new collaborations, while also investing in AI to personalize gameplay and streamline production. CEO Forrest Li expressed optimism that AI-enabled in-game experiences and user-generated content will set Garena apart, though he acknowledged this is still in early development.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the adoption and expansion of Shopee’s VIP membership and instant delivery services across new markets, (2) Sea Money’s continued growth in digital lending and its penetration in Brazil and other emerging markets, and (3) further evidence that AI-powered advertising and content tools can drive incremental engagement and monetization. Progress in Garena’s content pipeline and the impact of new collaborations will also be key markers of execution.

Sea currently trades at $175.25, up from $146.45 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

Now Could Be The Perfect Time To Invest In These Stocks

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.