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SE Q2 Earnings Miss Estimates as Costs Rise, Revenues Beat & Grew Y/Y
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Key Takeaways
Sea Limited's Q2 revenues rose 48.1% to $7.8B, led by strong growth at Shopee & Monee.
Shopee revenues climbed 48.2%, while core marketplace revenues surged 65.6% on monetization gains.
Higher marketing and credit-loss costs narrowed Sea Limited's operating margin to 8.4% from 9.3%.
Sea Limited’s (SE - Free Report) adjusted earnings were 86 cents per share in the second quarter of 2026, missing the Zacks Consensus Estimate by 14%. On a reported basis, earnings per share rose 7.7% year over year to 70 cents.
Revenues of $7.8 billion increased 48.1% year over year and beat the Zacks Consensus Estimate by 6.39%, led by Shopee and Monee.
SE's Q2 Revenue Mix Leans on Shopee and Monee
Service revenues increased 48.6% year over year to $7.13 billion, while sales of goods rose 42.8% to $657.7 million. The mix continued to favor services, which include e-commerce marketplace activity, digital financial services and gaming.
Gross profit advanced 47.3% to $3.55 billion. However, gross margin edged down to 45.6% from 45.8% a year earlier as total cost of revenues increased 48.7% to $4.24 billion.
Sea Limited Sponsored ADR Price, Consensus and EPS Surprise
E-commerce (Shopee) generated revenues of $5.59 billion, up 48.2% year over year in the reported quarter. Marketplace revenues rose 48.9% to $4.93 billion, supported by GMV growth and improved monetization.
Core marketplace revenues, mainly transaction-based fees and advertising, surged 65.6% to $4.26 billion. Value-added services revenues fell 9.0% to $676.4 million due to higher revenue net-off against shipping subsidies.
Gross orders rose 27.5% to 4.2 billion, while adjusted EBITDA increased 12.2% to $255.4 million. Average monthly active buyers increased 18% year over year, and purchase frequency rose 8%. Ad revenues grew more than 70%, with ad take rate improving by more than 90 basis points.
SE's Monee Loan Book Expands With Stable NPLs
Digital Financial Services (Monee) revenues climbed 58.9% year over year to $1.40 billion, primarily reflecting growth in the credit business as lending activity increased. Adjusted EBITDA rose 12.8% to $288.0 million.
Consumer and SME loans principal outstanding reached $11.1 billion at quarter-end, up 62.5% year over year. The total included $10.0 billion of on-book loans and $1.1 billion of off-book loans. Loans past due by more than 90 days remained 1.0% of principal outstanding, stable sequentially. Management said it added around 5.3 million unique first-time borrowers during the quarter, while active credit users grew around 34% year over year to more than 40 million.
Sea Limited's Garena Posts Higher Bookings
Digital Entertainment’s (Garena) revenues increased 33.5% year over year to $746.6 million, driven by a larger active user base and deeper paying-user penetration. Bookings grew 15.5% to $763.5 million.
Adjusted EBITDA advanced 16.7% to $429.8 million and represented 56.3% of bookings, up from 55.7% a year earlier. Quarterly paying users increased 10.2% to 68.1 million, lifting the paying-user ratio to 10.2% from 9.3%.
SE's Higher Spending Pressures Operating Leverage
Sales and marketing expenses jumped 64.5% year over year to $1.66 billion, reflecting higher spending across Shopee, Monee and Garena. Provision for credit losses increased 71.5% to $555.2 million as Monee's lending activities expanded.
Operating income still rose 33.3% to $650.3 million, but operating margin narrowed to 8.4% from 9.3%. Net income increased 10.6% to $458.1 million, while income tax expense climbed 74.0% to $250.6 million.
SE’s Balance Sheet & Cash Flow
As of June 30, 2026, Sea Limited had cash and cash equivalents of $3.53 billion, compared with $4 billion as of March 31, 2026.
During the second quarter, the company repurchased 4.7 million shares for $416.8 million under its $1 billion share repurchase program.
Net cash generated from operating activities totaled $2.56 billion for the first six months of 2026. SE reported $1.1 billion in cash from operating activities in the first three months of 2026.
Sea Limited's Shopee Outlook Stays Firm
Management remains confident in Shopee's full-year GMV growth outlook of around 25%, while acknowledging foreign-exchange headwinds and tougher GMV comparisons in the second half. The company is also optimistic that Shopee will reach $1 billion in adjusted EBITDA for 2026. Management said the competitive environment remained relatively stable, while fulfillment economics continued to improve quarter over quarter. It also sees further room to raise the overall take rate through advertising and seller efficiency.
SE’s Zacks Rank & Stocks to Consider
Currently, Sea Limited carries a Zacks Rank #4 (Sell).
View the Zacks #1 Rank List
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SE Q2 Earnings Miss Estimates as Costs Rise, Revenues Beat & Grew Y/Y
Key Takeaways
Sea Limited’s (SE - Free Report) adjusted earnings were 86 cents per share in the second quarter of 2026, missing the Zacks Consensus Estimate by 14%. On a reported basis, earnings per share rose 7.7% year over year to 70 cents.
Revenues of $7.8 billion increased 48.1% year over year and beat the Zacks Consensus Estimate by 6.39%, led by Shopee and Monee.
SE's Q2 Revenue Mix Leans on Shopee and Monee
Service revenues increased 48.6% year over year to $7.13 billion, while sales of goods rose 42.8% to $657.7 million. The mix continued to favor services, which include e-commerce marketplace activity, digital financial services and gaming.
Gross profit advanced 47.3% to $3.55 billion. However, gross margin edged down to 45.6% from 45.8% a year earlier as total cost of revenues increased 48.7% to $4.24 billion.
Sea Limited Sponsored ADR Price, Consensus and EPS Surprise
Sea Limited Sponsored ADR price-consensus-eps-surprise-chart | Sea Limited Sponsored ADR Quote
Sea Limited's Shopee Monetization Gains Strength
E-commerce (Shopee) generated revenues of $5.59 billion, up 48.2% year over year in the reported quarter. Marketplace revenues rose 48.9% to $4.93 billion, supported by GMV growth and improved monetization.
Core marketplace revenues, mainly transaction-based fees and advertising, surged 65.6% to $4.26 billion. Value-added services revenues fell 9.0% to $676.4 million due to higher revenue net-off against shipping subsidies.
Gross orders rose 27.5% to 4.2 billion, while adjusted EBITDA increased 12.2% to $255.4 million. Average monthly active buyers increased 18% year over year, and purchase frequency rose 8%. Ad revenues grew more than 70%, with ad take rate improving by more than 90 basis points.
SE's Monee Loan Book Expands With Stable NPLs
Digital Financial Services (Monee) revenues climbed 58.9% year over year to $1.40 billion, primarily reflecting growth in the credit business as lending activity increased. Adjusted EBITDA rose 12.8% to $288.0 million.
Consumer and SME loans principal outstanding reached $11.1 billion at quarter-end, up 62.5% year over year. The total included $10.0 billion of on-book loans and $1.1 billion of off-book loans. Loans past due by more than 90 days remained 1.0% of principal outstanding, stable sequentially. Management said it added around 5.3 million unique first-time borrowers during the quarter, while active credit users grew around 34% year over year to more than 40 million.
Sea Limited's Garena Posts Higher Bookings
Digital Entertainment’s (Garena) revenues increased 33.5% year over year to $746.6 million, driven by a larger active user base and deeper paying-user penetration. Bookings grew 15.5% to $763.5 million.
Adjusted EBITDA advanced 16.7% to $429.8 million and represented 56.3% of bookings, up from 55.7% a year earlier. Quarterly paying users increased 10.2% to 68.1 million, lifting the paying-user ratio to 10.2% from 9.3%.
SE's Higher Spending Pressures Operating Leverage
Sales and marketing expenses jumped 64.5% year over year to $1.66 billion, reflecting higher spending across Shopee, Monee and Garena. Provision for credit losses increased 71.5% to $555.2 million as Monee's lending activities expanded.
Operating income still rose 33.3% to $650.3 million, but operating margin narrowed to 8.4% from 9.3%. Net income increased 10.6% to $458.1 million, while income tax expense climbed 74.0% to $250.6 million.
SE’s Balance Sheet & Cash Flow
As of June 30, 2026, Sea Limited had cash and cash equivalents of $3.53 billion, compared with $4 billion as of March 31, 2026.
During the second quarter, the company repurchased 4.7 million shares for $416.8 million under its $1 billion share repurchase program.
Net cash generated from operating activities totaled $2.56 billion for the first six months of 2026. SE reported $1.1 billion in cash from operating activities in the first three months of 2026.
Sea Limited's Shopee Outlook Stays Firm
Management remains confident in Shopee's full-year GMV growth outlook of around 25%, while acknowledging foreign-exchange headwinds and tougher GMV comparisons in the second half. The company is also optimistic that Shopee will reach $1 billion in adjusted EBITDA for 2026. Management said the competitive environment remained relatively stable, while fulfillment economics continued to improve quarter over quarter. It also sees further room to raise the overall take rate through advertising and seller efficiency.
SE’s Zacks Rank & Stocks to Consider
Currently, Sea Limited carries a Zacks Rank #4 (Sell).
Marvell Technology (MRVL - Free Report) , Analog Devices (ADI - Free Report) and NVIDIA (NVDA - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marvell Technology’s shares have surged 155.5% year-to-date. MRVL is set to report its second-quarter fiscal 2027 results on Aug. 27, 2026.
Analog Devices’ shares have gained 41.8% year-to-date. ADI is scheduled to report its third-quarter fiscal 2026 results on Aug. 19.
NVIDIA shares have returned 19.8% year-to-date. NVDA is scheduled to report its second-quarter fiscal 2027 results on Aug. 26, 2026.