Sea Limited's Q1 2025: Key Contradictions in Shopee's Growth, Profitability, and Ad Revenue Strategies

Shopee e-commerce growth and profitability, Monee fintech expansion and credit risk, Shopee's EBITDA margin targets, Shopee's ad take rate improvement strategy, and Shopee's ad revenue growth strategy are the key contradictions discussed in Sea Limited's latest 2025Q1 earnings call.



Shopee's Financial Performance and Profitability Improvement:
- Shopee reported GAAP marketplace revenue of $3.1 billion, up 29% year-on-year, and adjusted EBITDA of $264 million, a significant improvement from a loss last year.
- The growth was driven by improved unit economics, scale expansion, cost optimization, and enhanced monetization, particularly through advertising revenue, which grew by more than 50% year-on-year.

Digital Financial Services (Monee) Growth:
- Monee's digital financial services revenue increased by 58% year-on-year to reach $787 million, with adjusted EBITDA up by 62% year-on-year to $241 million.
- The growth was supported by loan book expansion, rising penetration on Shopee through SPayLater, and increased adoption of off-Shopee cash loans and SPayLater offline.

Garena's Gaming Success:
- Garena's total bookings grew 51% year-on-year, with adjusted EBITDA increasing by 57%.
- The performance was boosted by the successful NARUTO collaboration, which attracted new users and reactivated churned players, and by expanding the game portfolio with new titles like Delta Force Mobile.

AI and Operational Efficiency:
- Sea's deployment of AI solutions has led to enhancements in search recommendations, ad efficiency, and internal productivity, contributing to improved financial metrics.
- AI investments have resulted in better ad take rates and significant cost savings through automation and fraud detection, positively impacting overall operational efficiency.