---
title: "SE: Southeast Asia's mini Tencent roars back!"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/40689846.md"
description: "Often dubbed Southeast Asia's 'mini Tencent', $Sea(SE.US) reported Q1 2026 results pre-market on May 12 (U.S. time). The quarter was solid, with revenue growth and profit delivery both beating estimates.However, the upside was driven mainly by Digital Entertainment, not the core e-commerce biz. That makes the beat less high-quality. On profitability...Specifically: (1) Overall performance was strong. Total revenue was near $7.1bn (+47% YoY), well above last quarter’s pace and ahead of the Street’s ~36% growth expectation. As noted, gaming led the beat, while e-commerce and fintech also posted robust growth."
datetime: "2026-05-12T15:42:56.000Z"
locales:
  - [en](https://longbridge.com/en/topics/40689846.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/40689846.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/40689846.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# SE: Southeast Asia's mini Tencent roars back!

Often dubbed the 'Tencent of SEA', $Sea(SE.US) posted Q1 FY26 results pre-mkt on May 12. Headline numbers beat, with both revenue growth and profitability ahead of estimates. However, the upside skewed to gaming rather than the more critical e-commerce unit, tempering the quality of the beat. Details below:

**1) Solid overall print: total revenue near $7.1bn, +47% YoY**, well above last quarter’s growth and the Street’s ~36%. The outperformance was driven primarily by gaming, though e-commerce and fintech also delivered strong growth. On profitability, **adj. EBITDA came in at $1.03bn**, **~15% above consensus**. While margins are down from last year’s peak, **they improved markedly QoQ to 14.6% from 11.5%**, back to Q2–Q3 last year levels.

**2) E-commerce still growing fast, profitability bottoming earlier than guided:** Shopee maintained robust growth, with **orders +29% YoY and GMV +30.4% YoY, accelerating QoQ**. GMV outpaced orders as **AOV turned positive (+1% YoY)** vs. -4% YoY last quarter, helped in part by FX tailwinds.

**Platform take rate was 12.3%, up 20bps QoQ.** Within that, **commission take rate rose 40bps QoQ**, while **VAS (mainly logistics) dipped 10bps QoQ**. Despite free-shipping promotions, blended monetization continued to trend higher. On the back of strong GMV and higher take rates, **Shopee revenue** (incl. 1P) **grew 45% YoY**, accelerating QoQ and beating **Bloomberg consensus of 36%**.

**3) Garena delivered a new post-2021 high and a major beat**: Despite a tough base from last year’s Naruto tie-in, **bookings rose ~20% YoY** vs. a cautious setup. Management indicated **Free Fire partnered with another top IP, Jujutsu Kaisen**, and **Arena of Valor also performed well** this quarter.

Against the high base, both actives and payers (+12% YoY) rose, and ARPPU increased ~7% YoY. As a result, **gaming revenue reached $670mn (+41% YoY), far above expectations**, with ~23bn+ in bookings recorded as deferred revenue for release in subsequent quarters.

**4) Monee keeps growing, credit costs contained**: Core KPIs remained healthy with **outstanding loans at $9.9bn** (on/off balance sheet). **Net adds slowed to $0.7bn QoQ**, likely due to holiday seasonality, **but loans still rose 71% YoY, topping the Street’s $9.4bn**. **Segment revenue was $1.24bn (+58% YoY), still lagging loan growth**, reflecting penetration into lower-rate users and products. **90+ DPD ratio was 1.1%, flat QoQ**. Provisions as a % of loans were 19.5%, up slightly QoQ but down YoY, indicating solid asset quality and risk control.

**5) Profit by segment:** With bookings well ahead, **gaming adj. EBITDA rose ~25% YoY to $1.03bn**, beating the ~$900mn consensus. **E-commerce margin was 0.6%** (on GMV), **improving from 0.55% QoQ** and better than prior guidance implied. However, **consensus was also 0.6%**, so the recovery trend was in line rather than a beat. **Fintech margins were softer at 22%, down 100bps QoQ**, leaving **segment profit up only 14% YoY** despite a 71% surge in loans. Revenue grew, but profit leverage lagged.

**6) GP held up, opex heavy:** At the cost line, **group GPM was 44.3%, up ~50bps QoQ off the trough**, broadly in line with expectations. By segment, **gaming GPM was broadly stable**, while **e-commerce GPM rose further to 30% from 29.7%**, consistent with higher commission monetization. **Fintech GPM also remained broadly stable**. The main drag on incremental profit release was **opex, which rose 42% YoY**, only slightly below revenue growth of 47%, underscoring continued heavy investment. Ex-R&D, **where spend was roughly flat YoY**, **other opex lines grew solidly**. Marketing rose 52%, with fintech marketing up 141% YoY, the fastest within the group. Credit loss provisions tied to fintech also had a sizable impact, rising ~65% YoY.

**Dolphin Research View:**

1) Coming off a softer prior quarter and management’s message of elevated investment, expectations were muted. Against that backdrop, this quarter’s print was clearly solid. Gaming delivered a large beat, while e-commerce and fintech maintained high growth and e-commerce margins showed signs of bottoming earlier than guided. The key shortcoming is fintech facing growing pressure from both gross margin and opex as it scales into deeper waters.

**2) Outlook & logic**

The core setup remains similar to the past two quarters: **the company still prioritizes growth over margins**. **E-commerce and fintech continue to expand well, but heavier investment and business expansion keep margins under pressure or flat**. The market, however, currently prefers near-term earnings over long-dated growth, especially for 'non-AI beneficiaries'. This mismatch between strategy and investor preference helps explain the stock’s recent weakness. Two catalysts could turn the stock: a) a clear margin inflection, especially in e-commerce, and b) a shift in risk appetite toward paying for long-term growth.

When might e-commerce margins inflect? Shopee remains in a phase of investment in logistics and membership benefits (more free shipping and discounts). As such, **margins will likely remain under pressure near term**. Over the medium to long term, whether via a strategic pivot to lower spend, efficiency gains from logistics and higher repeat rates, or rising monetization (higher commissions and ads), **e-commerce margin improvement looks inevitable**. **Sell-side consensus expects a margin upturn from H2 2026**. Given this quarter’s print, that could arrive earlier; we will watch whether this is a one-off rebound or a trend back to sustained profit release.

In any case, we believe **temporary investment will not permanently depress target margins**. The only scenario that could keep Shopee from reaching its margin target (e.g., the previously guided ~2%) would likely be structurally intense competition. Competition is real — TikTok Shop and Lazada in SEA, and MELI and Amazon in Brazil — but **we do not see a clear deterioration in Shopee’s competitive position in either SEA or Brazil at the margin**. Third-party data show **Shopee’s MAU and user share are steadily rising in both markets** (as are key rivals’ shares, with smaller local players losing ground).

Moreover, **Shopee and TT Shop in SEA are still jointly pushing monetization**. Both seem to be pursuing disciplined competition to grow the pie and profits rather than a destructive share grab. Since Apr, Shopee announced 1–1.5ppt commission hikes across multiple markets, and TT Shop also lifted commissions by 1–2ppt in select markets.

2) For Monee, growth remains strong with stable delinquency, and **Monee continues to expand into off-ecosystem payments/credit use cases**. As noted last quarter, **expansion into new markets, cohorts, and products inevitably brings lower-credit customers and lower-margin offerings**, which will weigh on margins.

3) As for gaming, the upside aligns with our prior view. While **the segment still leans on legacy franchises like** _**Free Fire**_ **and** _**Arena of Valor**_, the pipeline remains thin. Even so, repeated concerns that engagement and bookings would fade post-collab have been disproven multiple times. **Management has shown Tencent-like live-ops ability to keep flagship titles 'evergreen'**, sustaining bookings growth over time.

**3) Valuation:** We make modest adjustments. For gaming, given the strong quarter, we no longer model a YoY bookings decline in 2026 and now assume low positive growth. For e-commerce, we lift our 2026 margin assumption from below 0.6% to ~0.65%, implying only a slight YoY dip. We leave fintech largely unchanged. With risk appetite subdued, we trim multiples: gaming at 10x PE, e-commerce at 12x PE/EBITDA, and fintech at 18x PE given faster growth.

That implies a neutral PT of ~$125 for the ADRs, which remains achievable. The key watch item is whether e-commerce margins continue to be revised up.

**Detailed takeaways:**

**I. Shopee: growth remains strong; free shipping has not derailed take-rate gains**

Shopee remained robust on growth. **Orders rose 29% YoY, with a slight QoQ deceleration**, still close to 30% despite a rising base and reflecting continued logistics-driven volume benefits. **GMV grew 30.4% YoY, accelerating QoQ**, implying **AOV turned positive (+1% YoY)** vs. a 4% YoY decline last quarter. With a weaker USD this quarter, **FX likely helped**.

On revenue and monetization, **platform take rate was 12.3%, up 20bps QoQ**. **Commission take rate rose 40bps QoQ**, while **VAS (mainly logistics) dipped 10bps QoQ**. Even amid lower free-shipping thresholds and VIP free shipping pressuring logistics monetization, higher commission rates kept blended take rates moving up. When logistics investments begin to pay back, logistics monetization should again help lift the blended take rate. With strong GMV and higher take rates, **Shopee total revenue** (incl. 1P) **rose 45% YoY**, well above last quarter’s pace and the **36% Bloomberg consensus**.

**II. Garena: bookings at a post-2021 high, the biggest swing factor this quarter**

Although now the third most important segment by scale, **Garena was the largest contributor to the beat**. Against last year’s Naruto-driven peak, the market expected slight bookings declines at best. Actual **bookings rose ~20% YoY**, well ahead of expectations, driven by **another Free Fire collab with Jujutsu Kaisen** and a **'historical' contribution from Arena of Valor**.

**Quarterly actives** reached 670mn, **+1% YoY**, while **payers rose 12% YoY** to 72.6mn. Both topped expectations for declines off a high base. **ARPPU increased ~7% YoY**, and together with more payers, delivered ~20% bookings growth. In turn, gaming revenue hit $670mn (+41% YoY), beating the Street, with ~23bn+ in bookings recognized as deferred revenue for future periods.

**III. Monee: growth still solid, NPLs stable**

**The No.2 segment, Monee, delivered a good but more measured quarter**. **Outstanding loans reached $9.9bn** (on/off-BS), with **net adds of $0.7bn QoQ** (vs. $1.3bn last quarter), likely reflecting seasonal holiday effects. **Loans still grew 71% YoY, above the Street’s $9.4bn**, underscoring solid momentum. **Segment revenue was $1.24bn (+58% YoY)**, strong yet below loan growth, consistent with expansion into lower-rate users and products. **90+ DPD was 1.1%, unchanged QoQ**, and provisions/loans were 19.5%, up slightly QoQ but down YoY, indicating healthy credit quality.

**IV. Gaming profit beat; e-commerce margins bottomed; fintech profit softer**

With gaming well ahead and e-commerce and fintech also growing strongly, **group revenue was ~$7.1bn (+47% YoY)**, beating Bloomberg consensus of ~$6.6bn and ~36% growth. Profits also topped expectations. **Adj. EBITDA was $1.03bn, ~15% above consensus**. Despite a record base in Q1 last year and ongoing investment, **profit still grew ~9% YoY to a new quarterly high**. **Group EBITDA margin was 14.6%**, down YoY but notably improved QoQ, back to roughly Q2–Q3 last year levels.

By segment, **gaming adj. EBITDA rose ~25% YoY to $1.03bn** on strong bookings, beating the ~$900mn Street. Margin (on bookings) was ~62%, up another 250bps QoQ. **E-commerce margin was 0.6%** (on GMV), **up from 0.55% QoQ**, better than guidance had implied, though **in line with the Street at 0.6%**. **Fintech margin was 22%, down another 100bps QoQ**, leaving **segment profit up only 14% YoY** despite 71% loan growth — clear revenue without strong profit leverage.

**V. Opex stays elevated; GPM beat with QoQ improvement**

On costs and expenses, **group GPM was 44.3%, up ~50bps QoQ**, in line with market expectations. By segment, **gaming GPM was broadly flat at ~69%**, and **e-commerce GPM rose to 30% from 29.7%**, consistent with a richer commission mix. **Even fintech — despite lower EBIT margin — saw largely stable GPM**, easing slightly from 88.8% to 88.5%. That said, **opex rose 42% YoY**, just below revenue growth of 47%, underscoring a high level of spend consistent with a growth-first playbook.

Ex-R&D, **where spend was roughly flat YoY**, **other opex lines grew fast**. Marketing rose 52% YoY. By segment, **fintech marketing spend jumped 141% YoY**, the fastest, reflecting tougher CAC in new markets. E-commerce and gaming sales/marketing rose 55% and 40%, respectively. Overall, **the opex ratio ticked up ~50bps QoQ**, so the profit beat was driven more by better-than-feared gross margins than by lighter opex.

<End of text\>

**Past Dolphin Research coverage on \[Sea\]:**

Nov 12, 2025 earnings call notes: [**Sea (Trans): Investing for long-term profitable growth**](https://longbridge.com/en/topics/36251721)

Nov 12, 2025 earnings take: [**SEA: Same answers, fading market patience**](https://longportapp.cn/en/topics/36251217)

Aug 13, 2025 earnings call notes: [**Sea (Trans): Expect H2 GMV growth similar to H1**](https://longbridge.com/en/topics/32878827)

Aug 13, 2025 earnings take: [**SEA: Has the 'mini-Tencent' finally taken off?**](https://longportapp.cn/en/topics/32878118)

May 14, 2025 earnings call notes: [**Sea (Trans): No full-year bookings guide; e-com margin target 2%–3% of GMV**](https://longportapp.cn/en/topics/29600053)

May 14, 2025 earnings take: [**SEA: Riding the Naruto IP — can the blowout last?**](https://longportapp.cn/en/topics/29597508)

Mar 5, 2025 earnings take: [**SEA: Still not missing a beat — still 'mini-Tencent'**](https://longportapp.cn/en/topics/27805362)

Mar 5, 2025 call notes: [Sea (Trans): 2025 GMV expected +20%](https://longportapp.cn/en/topics/27808115)

**Risk disclosure & disclaimer:** [**Dolphin Research disclaimer and general disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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