業績會第一現場

joined discussion · ·

Sea 2025Q3業績直播

Key Takeaways (AI-Generated)

Financial Performance

- Total revenue increased 38% year-over-year to $6 billion in Q3 2025

- Adjusted EBITDA grew 68% year-over-year to $874 million

- Shopee GMV grew 28% year-over-year to $32.2 billion with gross orders up 28%

- Net income was $375 million vs $153 million in Q3 2024

Business Highlights

- Shopee achieved 5 consecutive quarters of sequential GMV growth driven by active buyers

- Take rate increased with ad revenue up over 70% and ad take rate rising 88+ basis points

- Money's loan book expanded 70% year-over-year to $7.9 billion maintaining stable NPL ratio

- Shopping VIP membership surpassed 3.5 million members, up 75% from previous quarter

Financial Guidance

- Shopee full year 2025 GMV growth expected to be more than 25%

- Garena remains on track to achieve more than 30% year-over-year bookings growth for 2025

- Management believes able to deliver 2-3% EBITDA margin with year-over-year improvement

Opportunities

- AI implementation showing 10% improvement in purchase conversion rate

- Market expansion into Argentina leveraging Brazil infrastructure and operational synergies

- YouTube partnership driving 30%+ quarter-over-quarter growth in orders, extending to Brazil

- VIP members bought 3 times more frequently and spend 5 times more than non-subscribers

Full Transcript (AI-Generated)

Operator

Good morning and good evening to all and welcome to the SEA Limited Third Quarter 2025 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarked there will be a question and answer session. If you would like to ask a question during this time, simply press * followed by the number one on your telephone keypad. If you would like to withdraw your question, press *1. Again for operator assistance throughout the call, please press *0. And finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Miss Rebecca Lee to begin the conference. Please go ahead.

Rebecca Lee

Thank you. Hello, everyone, and welcome to C's 2025 third quarter earnings conference call. I am Rebecca from C's Investor Relations team. On this call we may make forward-looking statements which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release. Also this call includes the discussion of certain non GAAP financial measures such as Adjusted EBITDA. We believe these measures can enhance our investors understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures. For discussion of the use of non GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non GAAP financial measures in our press release.

I have with me these Chairman and Chief Executive Officer, Force Lee, President Chris Wong and Chief Financial Officer Tony Ho. Our management will share strategy and business updates, operating highlights and financial performance for the third quarter of 2025. This will be followed by AQ and a session in which we welcome any questions you have. With that, let me turn the call over to Boris.

Forrest Li

Hello, everyone, and thank you for joining today's call. After a very strong first half of the year, our momentum has continued into the third quarter. We achieved the total revenue of $6 billion and Adjusted EBITDA of $874 million, representing 38% and the 68% year on year growth respectively. Shortage GMV grew by over 28% year on year. Money's long book expanded 70% year on year while maintaining a stable risk of profile. And the Garena delivered its best quarter since 2021 with quarterly bookings have over 50%. Year on year.

Our focus remains the same, continuing to deliver high and profitable growth across all three of our businesses. With e-commerce and the digital finance penetration in our market still low, but increasing strong growth lays the best foundation to maximize our long term profitability. I'm very pleased with the profitable growth we have consistently delivered. And we will keep on this path. With that, let me take you through each business's performance, starting with e-commerce.

Shopee delivered another record setting quarter, achieving new highs in quarterly GMV gross order volume and revenue. We have now achieved 5 consecutive quarters of sequential GMV growth driven by more active buyers and the higher purchase frequency. And we have improved our year on year profitability across Asia and Brazil. Our monetization continued its upward trend into the third quarter. Take rate increased both year on year and quarter on quarter.

As for a big contributor, our efforts to make ad services both simpler and the smarter draw broader adoption and the higher ad spend by our sellers. Ad revenue increased over 70% and AD take rate rose by more than 88 basis points. Year on year. The number of sellers using our ad products increased by more than 25% and their average ad spend increased by over 40% year on year. Our monetization gains, strong growth momentum and the healthy balance sheet have positioned us well to capture even more growth opportunities.

Our three operational priorities, the enhancing price competitiveness, improving service quality and strengthening our content ecosystem have proven to be a winning formula and that they remain consistent within these priorities. Let me highlight some of the areas we have been investing into that we believe are critical for our long term competitiveness and profitability. First, we continue to improve our logistics capability, a highly strategic competitive mode that has depreciated us from our peers.

We launched XPS Express in 2018 when we recognized that reliable and cost effective delivery was the most urgent logistics demand in our market due to wide differences in geography and in structure. Over the years we have learned how to deliver packages by truck, plane, boat, motorbike and more. We deliver well in dense, congested and high right cities. We also deliver well in rural areas where we need to Cross River, navigate right field and then locate home without formal addresses or postal code.

This experience has given us a very deep understanding of every region in our market. Our delivery capability has now developed to the point where we can identify and deploy service quality improvements addressing best user needs in different markets. It helps us to serve more user better while improving our operational efficiency even further. For example, in Indonesia, we saw growing demand from urban buyers for very fast delivery and the waiting need to pay a premium for it.

So we rolled out same day and the instant delivery with the delivery times as fast as under 2 hours. The response was excellent. Ordered using these faster options in the Greater Jakarta area increased by more than 35% year on year in the third quarter. But for rural regions, we do a preference for economical delivery. So we came up with the delivery solution that reduced the cost for order by 20% compared to our standard delivery, allowing rural buyers to enjoy free shipping with much lower minimum spend.

The boosted shopping popularity among rural buyers. Orders that delivered outside of Java increased by more than 45% year on year in the third quarter. In Taiwan, we noticed a very different customer demand. Many buyers preferred self pickup options. So we expanded our automated locker store network to over 2500 locations in less than three years, making up the only e-commerce player in Taiwan. With the locker network at such scale today, it is the key logistic.

Channel accounting for more than 70% of all our deliveries in Taiwan. This move has paid off in more than one way. The lockers run at over 30% lower cost per order than traditional P pub locations. On top of that, the locker locations double up at last mile hubs for home delivery at a lower cost compared to traditional last mile models. In other words, we are making our buyers happier while reducing our cost.

In the third quarter, our GMV in Taiwan showed double digit growth year on year and we still see a lot of room to deepen our penetration further in this highly attractive market. Today, we have to build XPX Express into a clear leader in scale, coverage and the cost in our Asian market. Our deep local insights have enabled us to customize ground strategies to create the most efficient and effective solution in every market, reinforcing our cost advantage.

Our logistics capability underpins the strong growth we have seen from shopping this year, playing a big role in making us the platform of choice for both buyers and sellers. With our delivery capabilities well scaled, our next goal to further deepen our logistics competitive mode is to enhance our fulfillment capability. This addresses a more upstream need for our sellers, ensuring fast, accurate order handling in addition to speedy and reliable delivery.

We aim to make fulfillment a second core pillar of our overall logistics capability, another way for us to strengthen our reputation among buyers and sellers and ensure high levels of customer satisfaction. Just as we did with delivery. These efforts are already underway in previous calls that have shared updates on initiatives such as intelligent demand forecasting, where we appreciate commonly ordered products closer to where we anticipate buyer demand will be.

This helps us reduce buyer rating time and fulfill orders more cost efficiently. For instance, in Indonesia, if we wait until an order comes in from a remote island before shipping the item out from Java, we must rely on more expensive forms of transport such as airplanes to get it there quickly. But if we have already anticipated this demand, we can use cheaper forms of transport to pre ship it to the area, letting us deliver it quickly and the cost effectively when the order is placed.

We have made further headway in fulfillment by starting to offer warehouse solutions in some of our markets. Offering fulfillment services benefits everyone. It takes the burden of packaging and the shipment of sellers. It gives the buyers more consistent service and it allows Shopee to better optimize end to end logistics while serving more buyers and sellers. We are investing in this capability in a capital efficient way, for instance by mostly leasing rather than buying land and warehouses.

The most intense investment comes not in the form of money, but in time and effort. It would be very difficult to build a fulfillment capability without a deep understanding of logistics needs in our market and the tightly integrated delivery network to pair it with. After seven years of experience with XPS Express, we have both. Second, we continue to find new and exciting ways to deepen user engagement.

Our subscription based the Shopping VIP membership program is a great example and it continued to gain strong traction. By the end of September, we IT members across Indonesia, Thailand, Vietnam surpassed 3.5 million, up more than 75% from the previous quarter, giving the price sensitivity of many customers in our market. The success of our VIP program shows the high value we are delivering to our customers VIP members.

Treating higher engagement in Indonesia, these members spend around 40% more after subscribing to the program. Shopping with IT members also bought 3 times more frequently and spend five times more than non subscribers in the third quarter, accounting for about 10% of total GMB in Indonesia. We have also deepened user engagement by enhancing Shopee's content ecosystem. Our partnership with YouTube continues to gain strong traction in the third quarter.

Shopping orders driven by YouTube content across our Southeast Asian market grew by more than 30% quarter on quarter. With these strong results, we are now extending this partnership to Brazil. Late last month, we also announced the collaboration with Meta to launch new tools allowing seamless product promotion and check out between Facebook and the shopping account. We are expected to see how the partnership will enrich our buyer community further.

Third, we are committed to embracing AI as a powerful way to improve the whole consumer retail experience. Our AI efforts have already began to bear fruit, contributing meaningfully to our monetization gains in the third quarter. Smarter search, better recommendations and more personalized the content have made shopping easier and more enjoyable to shop on. We have also used the AI to enhance product discovery beyond search, helping buyers find relevant and interesting items even when they arrive without a specific purchase in mind.

We empowered sellers with AI tools, enabling them to generate image videos, text descriptions, and virtual showrooms to make their product listings more appealing. This initiative have increased the buyer engagement, improving our purchase conversion rate by 10% year on year in the third quarter. Taken together, all these efforts have resonated with our customers. Buyer purchase frequency across our market continues to improve, going up further 12% year on year in the third quarter.

Average monthly active buyers also increased 15% year on year in the third quarter. And Shopee remains consistently regarded as the e-commerce platform offering the most price competitiveness products in both our Asian market and Brazil based on quartic survey. I would also like to highlight our progress in Brazil where Shopee continued to deliver exceptional growth while maintaining positive digest EBITDA.

Our GMV growth there has been outpacing the market, driven by sustained increases in monthly active buyers, purchase frequency and average basket sizes over the past several quarters, our wide product assortment, highly competitive pricing and the structural cost leadership by enabling us to scale rapidly and profitably. Our continuous improvement in delivery speed and reliability have enabled us to expand into more upmarket product categories.

Delivery speed improved sequentially in the third quarter with average delivery time improving by about two days compared to a year ago in the greater Sao Paulo area when 3 puzzles were delivered the next day and then nearly half within two days. With these improvements, we're seeing more merchants listing higher value products and the new buyer cohorts showing higher spending patterns in the third quarter.

GMB for shopping more, our premium shopping section more than doubled year on year in Brazil. In conclusion, shopping has delivered another quarter of strong and profitable growth. With our strong performance year to date, we now expect to shop his full year 2025 GMV growth to be more than 25%. Next, moving to digital Financial Services, money has delivered another very strong quarter with revenue growing by 51% and Adjusted EBITDA growing more than 35% year on year.

Well, our 90 days and. Ratio remained stable at one point 1%. The strong growth was broad based driven by both user growth and the product expansion across multiple markets. Our Loom book expanded by around a billion dollars during the quarter to reach $7.9 billion at the end of September, solidifying our position as one of the largest unsecured consumer lenders in Southeast Asia.

Thailand has reached another major milestone, surpassing $2 billion in loans outstanding at the end of September. In Brazil, our loan book more than tripled year on year in the third quarter with improving portfolio quality and the stronger user performance. Our significant credit history with a very large base of users across many markets allows us to roll out products more widely while maintaining the health of our portfolio.

We used to take a widely approach to onboarding new users. Now any shopping user in most of our markets can apply for a pay later credit and we can make credit approval decisions very quickly, in many cases almost instantly. Moving to this old camp applied approach enabled us to add more than 5 million first time borrowers in the third quarter. New user cohorts scaled well with generally positive unit economics, A testament to our increasingly advanced risk underwriting capability.

At the end of the quarter, active users across our consumer and SME loan products reached 34 million, up nearly 45% year on year. Meanwhile, loan disbursement to new users still accounted for less than 10% of total disbursement in the third quarter. As we continue to accept credit quality before cross selling more products, we are also making our credit products on shopping and pay later off shopping and pay later and the personal cash loan easier to use in a wider set of use cases.

In many of our markets where credit card penetration remains low, we are steadily establishing as pay later as the trusted and the convenient payment method of choice for all kinds of purchases both online and offline. On shopping SP later has grown deadly as penetration continues to deepen across all our markets. GMV penetration now ranges from single digits in early markets to over 30% in more mature ones, reflecting our discipline in scaling only when incremental disbursement are profitable.

We see meaningful room to continue increasing at pay later on. Shopping penetration across our markets off shopping at pay later showed strong traction this quarter, growing over 300% year on year and over 40% quarter on quarter. It still only accounts for less than 10% of our total loom boost as of the end of September, so large offset remains for future growth.

This product segment represents a significant opportunity to unlock success to offline spend a very large part of consumer expenditure in many of our markets. The stand alone Shopee Pay app, supporting both online and offline payments across a wide range of merchants, is a key pillar of our strategy to grow our money businesses off Shopee in payments. It offers users a faster and more seamless experience, giving them direct success without having to go through the shopping app.

Beyond payment, it helps us unlock more use cases, positioning shopping pay as a one stop platform for users, broader financial needs of shopping, credit, insurance, wealth management and more. The app has launched in Indonesia, Thailand, Vietnam and Malaysia and it is showing strong traction. More than 20% of our Shopee Pay monthly transacting users are using the standard loan app.

Personal cash loan also grew strongly this quarter. In Indonesia. We have been offering higher limits and the longer tenures to attract more. Prime users who demonstrate strong repayment behavior. Normal sizes can typically range from a few $100 to over $1000, allowing us to serve users with larger financial needs. Building on this success, we have similarly expanded access to Prime users in Thailand and Malaysia where user adoption is going up quickly.

In Brazil, personal cash loans grew close to 50% quarter on quarter, driven by the continued popularity of the combined credit limit we offer to SP later users. In conclusion, money has delivered another excellent quarter dealing well, well diversifying our credit portfolio across market users and products. Our portfolio quality and our unit unit economics have remained healthy and we are standing at palacious reach beyond e-commerce and impending it into users, everyday financial users use cases.

This will build a pathway for strong off shopkeep growth for many years to come. Finally, moving to Digital Entertainment, Karina has delivered another dollar quarter. Bookings were up 51% and Adjusted EBITDA grew 48% year on year, making it our best quarter in 2021. Refire Anchor is a strong performance with the 2 high impact campaigns We game and the Naruto Shippuden Chapter 2.

The campaigns received a huge positive response, accelerating our growth momentum from the previous quarter. Our speed game collaboration incorporated iconic challenges from the blockbuster Netbeat TV series, such as the Red light, Green Light and the Glass bridge. The event drove strong participation with the Rhineline Green Light Challenge being played more than 300 million times in the quarter.

Our Naruto Shippuden Chapter 2 event expanded on the resounding success of Chapter One in the first quarter of this year. Based on gamer feedback and the performance insights, we identified new fun favorite ninja characters, new attack mechanics, highly sought after collectible items, and the new one-on-one mode letting players use signature abilities from the series. Chapter 2 went on to the past Chapter one in both engagement and revenue.

We do an extremely high social media share rate for Chapter 2 doubled already high bar. That's by our 8th anniversary event. Both Naruto chapters have achieved the highest satisfaction scores of any campaign launched over the past two years. Our Naruto content was very successful because it focused on what players value most, authenticity through attention to detail.

The strong focus underpins how we take IP collaboration to the next level and it is driven by Garena, the core created culture. First, we require every major IP partnership to be led by a team of a genuine Superfund of that IP within Garena to ensure authenticity and the respect for the original work. Naruto fans loved how closely the gameplay mirrored small but important details from the anime.

For instance, one key storyline from the original anime was about rogue ninja returning to destroy the ninja village they had been exiled from. In Chapter 1, we had to build this ninja village into our map and introduced iconic attack skills from the main anime characters. In Chapter 2, we introduced attack skills that were specifically from the rogue ninja characters like Fireballs, Black Fire, and exploding birds, and redesigned the map to feature a Detroit version of the ninja village.

Continuing the narrative between the chapters in a way that was true to the original enemy created a highly immersive experience and the Broadfan excitement to the next level. These are details only superfans would care about. And understand how to incorporate into gameplay. Second, we take a global yet local approach, bringing global IPS to our market in highly localized ways.

For instance, we took advantage of the huge traction of our Naruto campaign to hold Ninja being offline even in eight markets across Asia and America, attracting 10s of thousands of fans. The largest of this event was a 2 day International All Star Ninja Clash E sports tournament in Bangkok, with teams of three Fire players flying in from across Asia and Latin America to compete.

The Bangkok tournament was a huge success, becoming a top trending event on YouTube Gaming and on social media across key markets. In addition to such events, our team stay closely connected to players through creators, programs and fun group, tapping into a constant stream of feedback and ideas that shape game design addition. Its efforts build very strong community connection and the loyalty across our market.

Beyond free fire, we continue to expand our publishing portfolio with the launch of EA Sports FD Mobile in Vietnam last month, strengthening our long standing partnership with Electronic Arts. The game quickly became the country's most downloaded mobile game in October based on Censor Tower. By combining EA's world class football franchise with greatest local know how, we are deepening our expertise in sports game and reinforcing our position as a trusted publishing partner for global titles.

With this very strong quarter, the arena remains on track to achieve more than 30% year on year growth in bookings for 2025. Our creative deck discipline, execution and a close connection with players will continue to drive Karina's growth. In conclusion, both 3 businesses have to build up the strong momentum from the first half of the year, and it delivered another quarter of exceptional growth.

We will continue to make our digital ecosystems even more vibrant, strengthen our leadership position and deliver sustainable and profitable growth to our shareholders. With that, I invite Tony to discuss our financial.

Tony Hou

Thank you for us and thanks to everyone for joining the call for C Overall, total GAAP revenue increased 38% year on year to $6 billion in the third quarter of 2025. This was primarily driven by GMV growth of our e-commerce business and the growth of our digital financial services business. Our total Adjusted EBITDA was $874 million in the third quarter of 2025 compared to an Adjusted EBITDA of $521 million in the third quarter of 2024.

On e-commerce, Sharpie's gross orders increased 28% year on year to 3.6 billion in the third quarter of 2025 and GMV increased by 28% year on year to $32.2 billion in the third quarter of 2025. Our third quarter GAAP revenue of $4.3 billion included GAAP marketplace revenue of $3.8 billion, up 37% year on year and GAAP product revenue of 0 point $5 billion.

Within GAAP marketplace revenue, core marketplace revenue mainly consisting of transaction based fees and advertising revenues was $3.1 billion, up 53% year on year. Value added services revenue, mainly consisting of revenues related to logistic services was 0 point $7 billion, down 6% year on year due to increased shipping subsidies. e-commerce Adjusted EBITDA was $186 million in the third quarter of 2025 compared to an Adjusted EBITDA of $34 million in the third quarter of 2024.

Digital financial services. Revenue was up by 61% year on year to 990. $1,000,000 Adjusted EBITDA was up by 37% year on year to $258 million. As of the end of September, our consumer and SME loans principal outstanding reached $7.9 billion, up 70% year on year. This consists of $6.9 billion on book and 0 point $9 billion off book loan per civil.

Outstanding Non performing loans passed due by more than 90 days as a percentage of total consumer and SME loans was 1.1% at the end of the quarter. Digital entertainment bookings grew 51% year on year to $841 million GAAP revenue. New was up 31% year on year to $653,000,000. The growth. Was primarily due to the increase in our active user base as well as the deepened paying user penetration.

Digital Entertainment Adjusted EBITDA was $466 million, up 48% year on year. Returning to our consolidated numbers, we recognized a net non operating income of $61 million in the third quarter of 2025 compared to a net non operating income of $50 million in the third quarter of 2024. We had a net income tax expense of $161 million in the third quarter of 2025 compared to net income tax expense of $93,000,000 in the third quarter of 2024.

As a result, net income was $375,000,000 in third quarter of 2025 as compared to a net income of $153,000,000 in the third quarter of 2024.

Rebecca Lee

Thank you, Forrest and Tony. We are now ready to open the call to questions.

Operator

Operator, we will now begin the question and answer session. If you would like to ask a question during this time, simply press * followed by the number one on your telephone keypad. If you would like to withdraw your question, press *1. Again, in the interest of time, we'll take a minimum, a maximum of two questions at a time from each caller. If you wish to ask more questions, please request to join the question queue again after your first questions have been addressed. At this time, we'll pause momentarily to assemble our roster. Your first question comes from Ping Vit with Goldman Sachs Eye Management.

Ping Vit

And thank you very much for the. Opportunity, Congrats are the greatest results. 2 questions for me, both on. The ecommerce site #1 on your growth guidance of more than 25% year on year for 2025, what do you. Bake in in terms of the driver and competitive landscape. What do it mean for your margin trend and how should we think about these trend? Into 2026, that's question number one question #2 just. To have a good understanding of the margins.

So margin trend for ecommerce came down to 0.6% in the quarter despite higher take rate. Can you help us understand where is the investment area, whether this is in the fulfillment as you mentioned or is there also something else that we should be aware of? Are these more fixed or variable? And how long and how much? Should we expect this investment cycle to be?

Forrest Li

Yeah. But in term of the growth assumption of more than 25%, I, I think we are kind of half into the quarter already. It's basically based on what we see so far in the market on the momentums and compared landscapes. It's pretty much reflected of kind of what we see so far as we come into the quarter. And regarding the margin questions, the if you look at the the the previous year versus this year, we do see consistent improvement of margin.

If you look at year to year basis, as we shared before, we will obviously see quarter to quarter fluctuations sometimes for seasonality reasons of for some of the investment cycle of the initiative and could also be a particular market status in terms of where we are pushing some of these initiatives. So I think if you look at a bit sort of year to year trend, even going forward, I think we believe that we're able to deliver the 2 to 3% EBITDA margin as we shared before and also have improvement year to year.

If you look at the, the, the, the, the, the, the yearly basis In terms of where we are investing, one thing is we mentioned in the opening further investment into the logistic abilities and fulfillment capabilities. And beyond that we are also deepening our buy engagement and what is shared through for example our shopping VIP program that we shared in the opening as well.

And all those effort has been showing pretty good results. Our buy frequency improved 12% year and average monthly active buyers increased 15% year to year as well, which contribute to our great growth this quarter, which is way above the guidance we gave in the early of the year which is 20%. The the the most of this investment are less fixed per SE we take.

As a light approach, even coming to our logistics and. Businesses we don't own land, most of our capax is just improvement of building the warehouses or sorting facilities etc for our buy engagement and what is share program. VIP is also less fixed. Obviously you will see a little bit investment in the early days to get everybody understand the program and join the program.

But as time goes, it should be a quite possible program as you probably have seen in other e-commerce platforms across the globe.

Divya Kodile

Thank you very much. My first question is on your new market entry strategy and framework. Could you explain the rationale behind closing some of the cross-border operations in LATAM and the re entry into Argentina? What milestones would you monitor for Argentina before making it a localized business? And is this part of your 2026 priorities?

My second question is on market shares. If you can comment on the market shares in ASEAN, how are they, How have they moved in the third quarter? And also if you could comment on Taiwan, do you foresee increasing marketing spends and investments in Taiwan next year? We're also seeing a bigger contribution from cross-border with Taobao getting more popular there. So if you can comment on the market shares on ASEAN and Taiwan, that would be helpful. Thank you.

Forrest Li

Yeah, I think regarding the new market, we take a very highly selective approach on any new geographic expansions. Many of the initiative will be very early stage testing the market in nature. The reason we look at Argentina is it's essentially an expansion of our capability that build in Brazil leveraging on our existing cross-border infrastructure and the operational experiences we had already built in Brazil.

The objective is more to capture the operational synergies across the adjacent regions and open additional channel for our sellers with the minimal increasemental investment. I think the we would take some time to to learn about the market without sort of have a heavy investment into the market at this point of time for Chile and Colombia.

We decide to wind down our cross-border operation in Chile and Colombia as part of our ongoing review of our global business priorities to ensure our resources are focused on the key business priorities in line with our long term strategy in the region. Latin America are still important market for us that that we will continue to explore the opportunities to serve the consumers and business well there.

If you look at the absolute size in in Latin America, obviously Brazil's largest one where we are have a very large present there. Argentina as we mentioned and Colombian actually a relatively smaller market and also relatively more distance from from from Brazil. I guess that's thinking around the year. First question regarding the market share in South Asia in in quarter 3, as we shared our growth has been above kind of the expectations we shared before and across the region that we actually do believe that we are gaining market shares in South Asia growing faster than the market in South Asia for Taiwan in particular.

The the the cross-border to Taiwan has been in general a smaller part of the businesses and giving the complexity for the buyer experience on cross-border side. So we are less concerned about the cross-border players selling from oversea to Taiwan as a potential impact to our businesses. Actually if you look at the recent quarters, we grow very well in Taiwan, we grow double digit which is faster than the overall market in Taiwan.

So we are pretty confident that eating, we are the largest ecommerce platform with the largest assortment with the best pricing and also we have the best delivering infrastructure, which is much lower shipping and fulfillment cost compared to anyone in the market. We're able to defend our market share well. We're able to grow. Even faster in Taiwan with our infrastructure much better built than previous years.

Alicia Yap

Hi, good evening. Management, thanks for taking my questions and Congrats on the solid results. 2 questions. One is if you can elaborate a little bit more overall competitive landscape in Southeast Asia. So are there any country? That we are seeing more intense competition lately and also. So you know any countries that where you see peers are going faster than shall be and do you anticipate the live streaming peers to start shift more of the traffics and also the.

Purchase frequency to the shop based the marketplace model in. To the live streaming, if that is happening, you know what could be the potential threat to shopping? And then second questions is, should we assume the investment cycle this time around similar to maybe like a couple of years ago where there could be some step up investment that are more fun and loaded with GMB growth and my share growth to follow to later?

Especially for for example, like you need to ramp up your fulfillment, you know, capability in some of the markets which will yield better results later on. So could you clarify if this time the investment cycle could be similar to what we saw last two, I mean two years ago? Thank you.

Forrest Li

On the competitive landscapes, what we see is relatively stable competitive landscapes. I think as you can probably observe as well from your own sources, we didn't see any particular market different from another. I think has been general trend across the South Asia market in terms of the intensities or the behavior of the competitors. The the regarding whether the live stream peers focus on more on shelf based model.

I think it's not something new. I think it's something we tried to do for quite long time. It's as you probably see from China as well etcetera. But we do see that the nature of the platform is, is is different. I think the percentage of shelf commerce, it's relatively consistent, let's say from from what we observed the, the, the also if they are much more traffic pushing towards that there is a potential of impacting how the overall app behavior and the user retention as well.

But but anyway, I think that's kind of similar behavior. You will see you know in China and South Asia, but we wouldn't see that a new thing impacting the competitive and big in a meaningful way on the investment cycles. I think the short answer is probably not. It's probably quite different from what do you see two years ago in term of the investment to their content ecosystem, if you remember that.

I think what we are doing now, it's more as a continuous investment to our business to strengthen our competitive mode, pretty aligned with what we shared continuously. Every quarter we would like to invest into our infrastructure to better logistics and now we are extending logistics to fulfillment networks. Well, it's actually in a way, it's not completely new.

It's capability we've been trying to build for a pure time and now we felt it's a good time to scale it even more. But as I shared just now, it's lesser CAPEC intensive businesses as you probably imagine. And also as we grow the businesses, it will help our growth as well because this will help us to lower down the overall cost to serve as ecosystem and also reduce the delivery time to the user, so help us to penetrate the user more.

And many of this contribute to our growth faster than we expected early the year as well. If you take a look at the VIP programs, yes, it's a little bit sort of investment in the early days, but we also see that with the investment we the, the the user are willing to spend more with the platform as well. I think Forest shared that they're the users purchase 40% more than before they joined the VIP program.

So in a way it's less a big front load investment then they return come later. I think this time you will see it's more ongoing investment program to strengthen our competitive mode as I shared earlier, and this will impact on the general growth as we invest.

Piyush Chowdhury

Yeah, hi. Thanks for the opportunity. Congratulations for great test numbers. 2 questions. Firstly for shopping logistics, what percentage of orders are now fulfilled by XPX within Asia and Brazil? How has it changed over the last one year or so? How much of increase in your cost of? Services is driven by this logistics investment and and outlook for this cost item that is first.

Secondly on Garina, can you share the outlook for free fire for twenty 26th after you know, successful 2025? Any planned IP collaborations? Any new game launches? Thanks a lot.

Tony Hou

On the FPS, I do believe we shared before more than half our order delivered through our SPX and the percentage has been increasing let's say overall over the over the last year as we scale our network on our cost per order, it has been continuously improving year to year. I think that's part of part of that contribute to our growth as well because this lower down the cost buyer have to pay to receive the the order.

But on top of that, I also want to highlight not only we try to not only reduce the cost of our SPX delivery cost, but we also increase the speed for our SDS cost. Forest mentioned that in Brazil we reduce the by waiting time by two days. If you look at the year to year, the in Asia, we also reduce the time quite meaningfully year to year and quarter, quarter as well by both introducing the faster shipping channel.

If you look at many countries, we have the instant delivery now we also have same day deliveries, but also reducing the normal delivery channels speed. I think this all help to contribute to our growth, as you see.

Forrest Li

For the greener outlook, and well we are. I'm very excited to, to observe the momentum. I think this is extremely valuable. Like I think the turn around like 2 years after the post COVID headwind. And in the, in the 2024, we have a very, very high growth and that is the strong momentum continuing to 2005. Actually the growth is the is even accelerated this year compared to compared to last year.

So the momentum is still very, very strong. So we remain very optimistic. And then the and the positive like for the like for the 2006, we believe that the user base will continue to grow. The, the, the content that the offerings will will, will be more like the the experience user experience is more immersive and I think like the specific this year was a very, very successful IP collaborations and I think arena as organization, we unlocked a very important capability.

So how to continually work with the global IPS and deliver the best content, very unique experience to our large user base, right? Whatever we put on the platform, put into the game, like on a single day more than 100 million gamers from all over the world, we're going to be able to experience that like the very, very, such very, very powerful distribution platform distribution channels.

So we'll continue to work with more IPS, but of course, we'll be also very, very selective as well. And we also quite excited to kind of see what like the AI can do. So in terms of the boosting the, the post, the creative side, production side and also the user experience side, we think that is the potential boost for the, for the future growth as as well.

At this moment, we're in the process of like a, like a for the detailed planning of, of next year. I think probably will have a better sense we're ready to share to the market what, what will be the specific outlook we we we see for Karena in 2026 next quarter. We always have some new games in our pipeline. We have a very, very strong and dedicated experience the developers to especially focus on the new games and where we have several games already in the pipeline or like in the some markets already live in the trial period where learning experiences.

And at this moment, I think be premature to project what is the impact. I think considering the the size of the scale of a free fire in terms of the user base and revenue and perfect. I don't think like at at this moment, like even if we have any new games at early stage will be make significant impact in terms of the in proper user user numbers and the and the and the and the and the revenue and the financial side.

But we're going to continually to put a lot of effort and and I think this through the new games development, we also learn about the different genres and we're also learn the different difference about some new market we haven't been to. I think it is to remain at the very with opportunity for future growth. So when we have like the way to feel with the right time to share. So we'll also keep all our shareholders and investors informed.

Jiang Zhao

Thank you very much for taking my questions. My first question is on the VIP membership. I'm trying to get a better understanding of that program. That's clearly a great thing to do longer term. I suspect in the near term, I was wondering what's the unit economics look like for the members and what do you think the eventual VIP member penetration should be in the region?

So the reason I obviously ask that is because your gross margins for e-commerce came down a bit quarter of 1/4. So I suspect it's kind of negative initially and is at a time frame to kind of reach break even for the members. Second question is about AII think Forrest, the reason that they did some media interviews talking about AI may may power the company to be one of the first trillion dollar company in the region.

I was hoping you can talk about what are some of the things potentially you may do all you won't do because some investors are worried about the massive AI CapEx that may be affiliated associated with any kind of a new venture. Thank you.

Tony Hou

On the VIP program, we are doing a very. Early stage of rolling out the program as you probably can see is only a few months, but we see a very good growth on the users signing up. If you look at sort of quarter to quarter, we see a 75% growth on the members in terms of the GMB penetration. We're showing the early stage, we're seeing the teams and we believe this can be a lot higher, probably similar to the percentage you observed in other part of the world in term of the penetrations.

The the I think the important thing for for us to look at the economics is that the, the we would like to make sure the VIP members not only receive better benefit from the platform because they are paid members and they are the important core users. We also want to make sure that we work with our partners to bring the benefit to them as well.

If you look at Indonesia with videos in VN, we work with FTP plays. We also work with 10 GBT as well. Offer a free program to the VIP members. I think all those will help us to have a good economics for this program. But you are right in the early days it does require some sort of investment to bring the user over.

One thing that we monitor very closely is the retention rate. We would like to make sure that the user we bring to the program has a good retentions and in our in our early market we see the retention improve almost doubled from the last quarter to this quarter pure time which is a big breakthrough for us giving that in our market credit card is not a common payment method in many other market people use credit card to make sure that it's a can use payment.

We are working on multiple ways to ensure that the retention goes well with the program well, especially together with our digital finance side through escalator as well.

Forrest Li

Sure, John on the on the AI question, yeah, I mean as I, as I shared during the interview you mentioned, we're we're deeply excited about the about the new technology. I think it's a represent a fundamental technology for revolution and which will create massive new opportunities and the supercharge technology's ability to unvalue unlock values for for for people everywhere.

I think the extreme really exciting for the market where in which still like millions of hundreds of millions of people, it's underserved, right? And, and we have things that are believed in the past 10 years through the, the, the mobile Internet revolution. And we have observed and how that much that the smartphone, the, the, the, the, the like a, like a mobile Internet transferred and the people's life, how bring how much like a joy and convenience to people's life.

And of course, we, we are, we are part of this transformation. And, and that is what we are really as a company. What is this is about our mission. We, we try to focus on the applications and how to connect those that create like a fantastic technology to the like the People's Daily life, every corner of the like from every corner of the world.

And we believe like some similar pattern of AI revolution probably we believe this impact and the value creation will be much, much bigger at this moment. So we're like the things you mentioned, OK, we probably were not going to do what the big tech is going to do. We're not going to like develop the trying to make some fundamental large language model breakthrough. We're not going to build data centers.

I think like for that part, we, we're very much like open to work with all the like a big tags like for kind of a, we have a lot of admiration respect to how much effort and how much they can do to continually have the breakthrough of the technology and making the technology more powerful and more useful. And what we are going to more focus on applications and how that technology builds the Silicon Valley or anywhere in the world transform to a consumers daily life, but small businesses like in Indonesia, in Vietnam, in Brazil.

So that work is especially what we're good at, and we have a lot of back practice we learned in the past decade. And I think that is also kind of like make us really, really excited. So we're going to have a very, very practical and bottom up approach. So, and we are very much focused on the seeing the immediate the return, the result as I shared in my opening, right.

And we're very excited like to see some very practical use say in, in Shopee, right? And how much this can help on the advertising conversion, how to make the product discovery easier. And, and it's like a, like a, like a more discovery and beyond traditional search, how to help sellers improve the product listing quality and, and how to improve the, the best retention and, and the conversion rate.

And I think I probably shared in the previous order like like 1/4. And also this is a, we see the improvement in terms of the customer service capability. And now majority of our customer service is a, it's a, it's a, it's handled by, by AI like a chat bot. And the satisfaction rate is, is very, very high.

So that is the, all the things like we have, we have seen the result and the progress of bottom up. And we believe with the continuing improvement of capability build enabled by the more advanced large, large language model and other other part of the AI development. And there will be more and more things we can apply and into the day-to-day business and which make a positive impact into People's Daily.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Miss Rebecca Lee for any closing remarks.

Rebecca Lee

Thank you all for joining today's call. We look forward to speaking to all of you again next quarter.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Details at Sea IR

Tips: The content presented above were generated by AI language model with publicly available information and auto-generated subtitles from third-party. The above material does not represent the position of Futu and shall not constitute any investment advice. Futu makes no express or implied warranties or representations regarding the accuracy, timeliness, or completeness of the information shown in the above content.

234K Views