Sea Ltd recently held its fourth-quarter earnings call for fiscal year 2025. The company's growth strategy for 2026 centers on two main themes: increasing wallet share from core users and expanding the buyer base. To achieve this, the company will invest in several key areas. First, it will continue to enhance the logistics experience. Second, it will deepen its VIP membership program. Additionally, content ecosystems are a major investment focus, with content business already accounting for over 20% of revenue, a trend expected to continue. The company plans to strengthen collaborations with external partners like YouTube and Facebook and explore partnerships with additional content providers.
Regarding the outlook for Garena, the company currently expects double-digit growth in 2026. Inspired by the successful partnership with "Naruto," the company will continue this IP collaboration, with a launch expected in the third quarter based on the current schedule. It is also actively negotiating other potential IP partnerships. Furthermore, as this is a World Cup year, and given the significant overlap between the global football community and gaming community, the company will launch numerous football-related promotional activities during the tournament.
**Q&A Session**
**Q: How does Shopee plan to achieve its GMV growth target of approximately 25% in 2026 while maintaining EBITDA at least at the 2025 level? What are the assumptions about the competitive landscape? What are the main investment areas and their duration?**
A: The 2026 growth strategy focuses on increasing wallet share from core users and expanding the buyer base. Investments will be made in several areas to drive growth. This includes continuously upgrading the logistics experience by improving delivery speed and reliability, expanding instant/same-day delivery services, and building a larger fulfillment center network to enable advanced stocking, thereby reducing delivery times and enhancing service reliability. Secondly, the VIP membership program will be deepened, not only by providing better services through the platform itself but also by collaborating with external partners to offer exclusive benefits for VIP users, aiming to increase their wallet share. The platform will also continue to implement pricing initiatives to ensure competitiveness. Content ecosystems remain a key investment area; with content business already exceeding 20% of revenue, this trend will continue. Collaborations with partners like YouTube and Facebook will be strengthened, and partnerships with other content providers will be explored. These investments are cyclical. For instance, building the fulfillment network, expanding instant delivery fleets, and promoting the VIP program involve initial costs, but the cost structure is expected to optimize afterward. Regarding profitability, EBITDA margin improved year-over-year in Q4 2025. The company believes it can achieve margin expansion by the end of 2026 and maintain the long-term trend toward a 2% to 3% EBITDA margin target. The competitive landscape is relatively stable in most markets, with no significant changes from the previous quarter.
**Q: SeaMoney's loan portfolio showed strong year-end growth exceeding 80%. What were the main drivers? What is the outlook for 2026 growth and EBITDA margin trends?**
A: This growth was driven by multiple factors. First, different markets are at different stages of development. Early-stage markets like Indonesia led with rapid growth, followed by high catch-up phases in markets like Taiwan and Malaysia. Newer markets like Brazil are also in a high-growth phase. Second, there has been continuous expansion of product lines. Most markets started with buy-now-pay-later (BNPL) offerings, then introduced personal cash loans. Even within BNPL, differentiated products with longer terms and slightly lower rates for higher-income segments present further growth opportunities. Additionally, penetration is increasing both on and off the Shopee platform; for example, in Malaysia, offline BNPL already accounts for 30% of its total. Margins may fluctuate quarterly due to variations in market mix, product mix, and customer acquisition pace, but the foundation is stable risk management, evidenced by steady non-performing loan ratios. The company continuously upgrades its risk models using new AI technologies to process long-sequence data and better utilize e-commerce data, enabling it to reach previously unserved user segments and achieve prudent loan portfolio growth.
**Q: Regarding Shopee's multiple investment areas, what are the approximate investment cycles? How should we view 2027 margins? When can we expect to see results from the deepened AI collaboration with Google?**
A: Investment cycles vary by project and market, making it difficult to generalize. However, the company is committed to ensuring that 2026 EBITDA exceeds the 2025 level in absolute terms. From a margin perspective, it is believed that by year-end or in the coming years, margins will not be worse than in Q4 2025 and should grow year-over-year. While full-year 2027 guidance has not been provided, the long-term trend suggests the 2% to 3% EBITDA margin target is achievable, depending on choices between profit and growth levers. The collaboration with Google is still in the product development phase and is not expected to take too long; results will be shared once products are ready. This collaboration is an extension of the long-standing partnership with Google across Google Shopping, Google Ads, and YouTube.
**Q: For Garena, what is the 2026 bookings growth outlook? Are there new IP partnership plans?**
A: Garena is currently expected to achieve double-digit growth in 2026. Regarding IP partnerships, encouraged by the success of the "Naruto" collaboration, the company will continue this IP partnership, with a launch anticipated in the third quarter. It is also actively negotiating other potential IP partnerships. Additionally, as this is a World Cup year, and given the high overlap between the global football and gaming communities, numerous football-related promotional activities will be launched during the tournament.
**Q: Can you discuss the retention and renewal rates for the Shopee VIP membership program? How do VIP members affect purchase frequency and category preferences? Are there differences in user behavior across countries, and how does that impact strategy?**
A: The Shopee VIP program has seen significant growth in recent months. In some markets, VIP members already contribute over 15% of GMV, and this share is believed to have the potential to double or triple. Member retention performance is strong. Historically, a key challenge for similar programs in the region has been payment success rates at renewal, with many users lost due to lack of credit cards. Through close collaboration between Shopee and SeaMoney, a smooth payment process has been implemented, addressing this issue. For example, in Indonesia, the subscription renewal rate has improved from 40% to 70% over recent quarters, a significant achievement in retaining VIP members. In terms of spending behavior, VIP members exhibit higher average purchase frequency and sometimes higher average order value. Overall, their spending is 30% to 40% higher than that of regular users. User behavior is quite similar across different markets; the main differences lie in market-specific preferences. Therefore, VIP member benefits are highly customized for each local market.
**Q: How does management prioritize investments related to e-commerce and AI? How are synergies among the three business segments leveraged to enhance competitive advantages and ecosystem value?**
A: Regarding investment prioritization: The SeaMoney business is already highly profitable, and most new user growth initiatives show positive lifetime value, with each investment delivering a positive return. In e-commerce, significant effort is dedicated to AI, also focusing on positive returns for each initiative. For example, AI investments in search recommendations and advertising systems have directly driven higher ad take rates. This includes using AI to expand product descriptions for better product understanding and expanding user queries for better intent understanding. A multimodal search feature was recently launched, allowing users to search using images plus long-text descriptions. These AI investments have clear value. Additionally, substantial AI tools are provided to help sellers, such as customizable AI chatbots launched in multiple markets to reduce labor costs and improve sales conversion, along with tools to help sellers create product videos and copy. These deliver positive returns for the ecosystem. Regarding business synergies, there is significant collaboration between e-commerce and financial services. Financial services heavily utilize Shopee user behavior data for risk assessment. SeaMoney still has substantial room to penetrate the Shopee user base beyond credit, including banking, insurance, and payment services. Meanwhile, SeaMoney's payment business also synergizes with Garena by facilitating game payments, and Shopee collaborates with the gaming business on product sales and user acquisition. There are various types of collaboration across the business segments.
**Q: For the Brazilian market, considering investments in fulfillment capabilities, will GMV growth accelerate this year? How does this affect average order value? Is the current AOV still significantly lower than the market leader (about one-third)? How much can the gap be narrowed through improved fulfillment?**
A: In Brazil, the company achieved a high growth rate in 2025 and believes this growth will continue in 2026. While specific country-level growth guidance was not provided, overall market growth is expected to be quite solid, and growth in Brazil is believed to continue outpacing the overall market. Regarding average order value, it is expected to gradually increase over time. The gap with competitors, while still present, is expected to narrow gradually.
**Q: What is the current penetration level of Shopee PayLater in Brazil, and will it increase significantly this year?**
A: Regarding BNPL penetration in Brazil, it is still at a very early stage. Although growth is significant, penetration levels are similar to early stages in other markets. Therefore, it is believed that BNPL penetration trends in Brazil during 2026 will resemble those in other Asian markets, showing continuous growth.
**Q: Regarding the content ecosystem in ASEAN, when do you expect it to reach a plateau? How do unit economics compare with traditional shelf-based e-commerce currently? What are the market share trends?**
A: Regarding the content ecosystem, the company believes it has not yet reached a plateau on the platform and there is room for further growth in the coming quarters. Unit economics have improved continuously over the years. While there may be minor quarterly fluctuations, the overall trend is still upward. The gap in unit economics between content-based and shelf-based e-commerce is expected to narrow over time, with no significant difference expected in the future.
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