Sea Ltd. (Singapore) Q3 FY2026 earnings call

Strategic Updates:

• C Cloud Launch: Management announced the launch of 'C Cloud,' an AI infrastructure and software business aimed at externalizing internal AI capabilities (fraud detection, customer service, content generation). It is structured as a capital-light startup focusing on software and orchestration rather than heavy physical infrastructure investment.
• Money IPO Plan: Forrest Lee stated that Money has reached sufficient scale and maturity to operate independently. The company aims for a standalone listing within the next one to three years, subject to market conditions and regulatory requirements, to provide dedicated capital for growth while maintaining close operational synergy with Shopee.

Operational Highlights - Shopee:

• Logistics Expansion: Instant delivery services now account for nearly 15% of orders in Greater Bangkok and have doubled YoY in Indonesia. Self-collection penetration exceeds 30% in Singapore and 15% in Malaysia. Economical shipping options now represent over half of total orders in Indonesia.
• Shopee VIP Growth: Membership exceeded 21 million users (+40% QoQ), contributing ~25% of GMV with ~80% monthly retention. A new 'VIP Plus' tier offering Netflix subscriptions launched in key markets.
• Content Ecosystem: Orders from live streaming and short-form video grew >45% YoY, accounting for >25% of physical goods orders. Affiliate partnerships with YouTube, Facebook, and Instagram are driving significant new user acquisition.
• Brazil Momentum: Brazil remains the fastest-growing market, with fulfillment volumes doubling YoY and average buyer waiting times improving 12% YoY.

Operational Highlights - Garena:

• Free Fire: Strong bookings growth driven by the successful 'Naruto Shippuden' collaboration, which generated >6.5 billion social media views and won industry awards.
• Arena of Valor (AOV): Celebrating its 10th anniversary with major offline events in Taipei, including a concert at the Taipei Dome and city-wide activations, reinforcing its status as an evergreen franchise.

Financial Discipline:

• Share Repurchases: The company has nearly completed its initial $1 billion share repurchase program and announced a plan to buy back an additional $1 billion worth of shares.

Shopee: Revenue reached $5.3 billion (GAAP Marketplace) with an additional $0.7 billion from product revenue, totaling approximately $6.1 billion in GAAP revenue for the segment. Gross Merchandise Value (GMV) rose 23% year-on-year to $39.7 billion, and gross orders increased 26% to $4.5 billion. Adjusted EBITDA was $269 million, a 45% year-on-year increase. Shopee contributed significantly to the company's overall profitability.

Money: GAAP revenue grew 64% year-on-year to $1.6 billion. The loan book expanded 60% year-on-year to $12.6 billion. Adjusted EBITDA increased 15% year-on-year to $298 million.

Garena: Bookings grew 6% year-on-year to $890 million. GAAP revenue increased 29% year-on-year to $840 million. Adjusted EBITDA surged 46% year-on-year to $458 million.

• Full Year 2026 GMV Growth: Confirmed target of approximately 25% year-on-year growth.
• Full Year 2026 Adjusted EBITDA: Maintained guidance of $1 billion for the Shopee segment.
• Financial Outlook: Management expressed confidence in delivering strong momentum for the remainder of 2026 based on performance in the first three quarters.

• Credit Risk in Money: The 90-day Non-Performing Loan (NPL) ratio increased slightly to 1.3%, primarily due to evolving credit environments in Thailand and Brazil, and shifts in product mix toward faster-growing segments. Management proactively adjusts underwriting criteria to manage this risk.
• Macro Uncertainties: Dynamic macroeconomic factors, including fuel price fluctuations, impact consumer consumption patterns, though management notes resilient demand driven by value-seeking behavior and low e-commerce penetration in target markets.
• Execution Risk in New Ventures: C Cloud is in a very early stage with no enterprise contracts secured yet. There is uncertainty regarding the long-term return profile and scalability of this new business line compared to established segments.

Q: Analyst asked about C Cloud’s return profile and milestones for Money’s potential IPO. / A: Forrest Lee described C Cloud as a long-term bet focused on AI adoption and falling token costs, emphasizing frugality and case-by-case financial discipline since it is in the formation stage. Regarding Money, he confirmed the aspiration for a standalone IPO in 1-3 years to unlock capital flexibility, while stressing that tight integration and synergies with Shopee will remain unchanged post-listing.

Q: Analyst questioned Shopee’s monetization flow into profitability and the economic impact of agentic AI partnerships like Meta’s Muse. / A: Chris Pong noted that while take rates improved, margins remained flat as gains were reinvested into further market expansion in South Asia and Brazil. He clarified that agentic AI partners like Muse function similarly to existing affiliate channels; checkout and seller relationships stay within the Shopee platform, so there is no immediate negative impact on economics or data retention.

Q: Analyst asked when peak investments in Shopee logistics/content would pass and if C Cloud has secured contracts. / A: Chris Pong stated that investment peaks vary by market rollout pace but confirmed the content ecosystem is contribution-margin positive. Fulfillment penetration is higher in South Asia than Brazil, with costs decreasing via automation and scale. Forrest Lee added that C Cloud has not yet secured enterprise contracts and will avoid heavy Capex on data centers, preferring to leverage existing internal infrastructure or partner prepayments to minimize financial risk.

Q: Analyst inquired about C Cloud’s long-term significance and Shopee’s GMV outlook amidst macro headwinds. / A: Forrest Lee expressed strong conviction that AI will transform every organization, viewing C Cloud as a potentially massive, permanent revenue stream despite current uncertainties. Chris Pong reported no significant slowdown in Shopee’s GMV growth, citing resilient demand driven by competitive pricing on long-tail products and essential purchases, which buffers against macro volatility.