Why did SE consistently beat earnings forecasts?

Sea Limited (SE) has consistently beaten earnings forecasts due to its strategic focus on expanding its e-commerce and digital entertainment segments, particularly through its Shopee and SeaMoney platforms.

1. **Strong Recovery in E-commerce**: Shopee, Sea's e-commerce arm, has seen significant growth in gross merchandise volume (GMV) and revenue. GMV expanded by 24% to $28.6 billion, surpassing management’s own forecasts. This was driven by increased demand and effective monetization strategies, such as raising merchant commission fees in key markets.
2. **Digital Entertainment's Resilience**: Garena, Sea's digital entertainment arm, reported a 17% increase in active users and a 19% rise in gross bookings, indicating growing traction in the market. This segment's performance highlights Sea's ability to adapt and innovate in response to changing consumer preferences.
3. **Financial Services Growth**: SeaMoney, the financial services segment, showed strong growth with revenues increasing by 55.2% year-over-year. Notably, consumer and SME loans principal outstanding surged 63.9% year-over-year, reaching $5 billion by the end of 2024. This growth was driven by on-platform SPayLater loans and off-platform cash loans, demonstrating a successful expansion of the credit business.
4. **Operational Efficiency and Cost Management**: Sea's improved profitability was also supported by operational efficiency and cost management. For instance, AI-driven automation optimized costs, reducing customer service expenses by 30%. This focus on efficiency contributed to the company's improved net income margin, which moved from -3% to 5%.

In summary, Sea's ability to leverage its strategic segments, particularly Shopee and SeaMoney, along with effective cost management, has been key to its consistent earnings beat.