Sea Limited Aktie

Good morning and good evening to all, and welcome to the Sea Limited Second Quarter 2026 Results Conference Call. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you.

I'd now like to welcome Mr. KC Ong to begin the conference. Please go ahead.

Hello everyone, and welcome to Sea's 2026 Second Quarter Earnings Conference Call. I am KC from Sea'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 a 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 Sea's Chairman and Chief Executive Officer, Forrest Li; President, Chris Feng; and Chief Financial Officer, Tony Hou. Our management will share strategy and business updates, operating highlights and financial performance for the second quarter of 2026. This will be followed by a Q&A session in which we welcome any questions you have.

With that, let me turn the call over to Forrest.

Hello everyone, and thank you for joining today's call. Our strong momentum from the first quarter has continued into the second. Sea generated $7.8 billion in revenue, up 48% year-on-year, and over $917 million in adjusted EBITDA. Our investments have enabled Shopee and Monee to continue to strengthen our market leadership while improving our user penetration. Many of our initiatives unit economics continue to improve, a testament to our strong financial discipline and operational efficiency. We will continue to invest prudently in serving more users and serving them better, broadening our foundation for profitable growth into the future.

With that, let me take you through each business' performance. Starting with Shopee. Shopee continued its strong momentum into the second quarter. GMV grew 28% year-on-year, marking eight consecutive quarters of sequential growth, and we again achieved new highs in gross order volume and revenue. We generated an adjusted EBITDA of more than $250 million during the second quarter. Our improving operational efficiency and growing scale have strengthened our unique economics. We can now profitably serve a wider range of users, enabling us to lean further into user acquisition.

We have engaged and reengaged several user groups through brand awareness campaigns, expanding our content channels and broadening our logistics offerings to cater to different preferences. This drove remarkable new buyer growth in the second quarter. Average monthly new active buyers grew more than 35% year-on-year, a significant acceleration from previous quarters. Average monthly active buyers increased 18% year-on-year and overall buyer engagement also continued to improve with purchase frequency increasing by 8% year-on-year.

Our monetization strengthened further in the second quarter. Ad revenue was up more than 70% and ad take rate improved by over 90 basis points year-on-year. We continued to make advertising simpler and smarter for sellers. For example, pairing ads with vouchers that are personalized to buyers to increase purchase conversion and improve the efficiency of sellers' ad spend. Ad adoption and spend continued to improve across our seller base. The number of ad paying sellers rose around 45%, while average ad spend per seller increased more than 15% year-on-year.

Our operational priorities remain consistent, improving price competitiveness, service quality and our content ecosystem. To keep strengthening our execution across these priorities, we continued to deepen our structural moats across logistics, ShopeeVIP and content. Strong logistics capabilities continue to be a key contributor to Shopee's reputation for excellent service. We continue to make delivery faster and more reliable across a wider product assortment in the second quarter. Instant and the same-day delivery gained strong traction as we captured more LED purchases. Our instant service initiative can now deliver in as fast as 1 hour in urban areas. We continue to expand our presence in high-frequency categories such as groceries and pharmacy items to serve our buyers better. Other volumes using instant delivery rates grew around 80% year-on-year in initial while cost per order fell by around 20%, driven by economies of scale and efficiency gains.

Beyond delivery, we also made good progress in fulfillment with other volumes up more than 20% quarter-on-quarter. Fulfillment benefits both sides of our marketplace. Sellers offload operational complexity and scale more efficiently while buyers enjoy faster, more reliable delivery. In some markets, more than 60% of our fulfilled parcels arrive the next day meaningfully higher than the platform average. The gains are especially noticeable in places where geography makes delivery challenging. For example, in Mindanao, a mountain region in the Philippines, fulfillment has buyer waiting time by 1 to 3 days, buyers can feel the difference. These teams have converted to fulfillment saw more than a 20% customers uplift in orders on average in Southeast Asia.

Second, our ShopeeVIP program continued to scale strongly. Now live across Asia and Brazil, total membership exceeded 15 million at the end of June, up 25% from the previous quarter. Across Asia, VIP members contributed 24% of GMV in the quarter. Average monthly retention remained strong at around 80% and members continue to show higher engagement spending meaningfully more after subscribing. In Brazil, early adoption has been encouraging since our April launch with membership already surpassing 1 million.

Beyond buyers, we are seeing encouraging support among both Shopee sellers and external partners for our ShopeeVIP program. We have brought the number of benefits across travel, dining and entertainment, improving the program's value proposition. More sellers and partners have come on board to co-fund benefits, demonstrating the value they see in engaging our ShopeeVIP buyer base. This has helped improve the program's unique economics in Asia.

Third, we have continued to improve our content ecosystem to make product discovery more engaging. Orders from live streaming and short-form video grew more than 50% year-on-year, accounting for more than 25% of physical good orders in Southeast Asia. Unit economics also improved sequentially as we further optimize our marketing spend. We have deepened our relationships with YouTube and Meta to drive order growth.

Shopee affiliate orders generated by linked creators on Facebook increased by more than 85% quarter-on-quarter, with Facebook Reels proving to be a very popular channel to drive purchases. We have now extended our Instagram collaboration to all eight of our core markets, and we are seeing promising early results from Indonesia, the first market where we launched the partnership. I'm particularly happy with our progress in Brazil, which remain our fastest scaling market in the second quarter. We once again outpaced the broader market on GMV growth supported by increases in active buyers, purchase frequency and average basket size. We continue to invest in and optimize our end-to-end logistics capabilities, expanding our network while ramping up utilization.

We improved the delivery speed, reducing average buyer waiting time by 15% year-on-year and doubled our penetration of fulfillment orders year-on-year. These logistics improvements are also supporting our expansion upmarket. We onboarded nearly 500 new official brands during the quarter, while GMV from Shopee Mall sellers more than doubled year-on-year. We still see significant headroom for growth in Brazil, and we will continue to invest in this market in a disciplined and profitable manner. I'm pleased that Shopee has delivered a strong first half of 2026. With this solid momentum we are optimistic that Shopee will achieve the milestone of $1 billion in adjusted EBITDA for the full year.

Next, moving to Monee. Monee delivered another great quarter with continued strong growth in both revenue and adjusted EBITDA. Credit remained the primary driver of growth. Our loan book reached $11.1 billion at the end of June, up 52% year-on-year. Asset quality remained stable with our 90-day NPL ratio at 1.0%. The Philippines has become our feed market with a loan book exceeding $1 billion. We continue to expand our credit business on three fronts: acquiring new users; deepening our relationships with existing users; and expanding our credit use cases.

One key enabler of our credit business growth has been the ongoing advances we have made in our credit risk capabilities. Our latest risk models are pretrained on our broad set of behavioral and transactional data across our ecosystem using transformer architecture similar to those following today's large language models. The model learns from the full sequence of the users' actions over time, capturing richer context around how customers interact with our platform. Recent enhancements to our underwriting models have helped lead approval rates by around 10% when compared to previous models while maintaining a similar level of risk. This further reinforces the scale of our ecosystem as a durable advantage.

To further strengthen this capability, we are also drawing on more external data sources to better assess users who are newer to our ecosystem. For instance, through partnerships with local mobile operators in Indonesia and Open Finance data in Brazil. We have also used AI to build tools to efficiently verify a diverse range of user submitted income documents across markets, languages and formats. Review time reduced by around 95% while maintaining a very high level of accuracy, letting us respond to credit limit requests from users almost instantly. Supported by this improvement in risk underwriting, we have been pushing harder on new user acquisition. We have found that many users begin using SPayLater for convenience and subsequently generate more value through repeat transactions, installment conversion and adoption of our other credit products. So we have broadened the rollout of 1 month interest-free SPayLater loans, giving forward the option to either settle their balances within the month or easily convert purchases into interest-bearing installments.

Similarly, we have been more widely offering promotional interest rates for first-time personal cash loans. Taken together, these efforts contributed to strong new user growth during the quarter. We added around 5.3 million unique first-time borrowers and our active credit users grew around 34% year-on-year to over $40 million at the end of the quarter. We also saw deeper user engagement, average loans outstanding per user grew around 20% year-on-year. Shopee SPayLater has continued to scale well, driven by integration with national QR payment infrastructure and continued merchant onboarding. By the end of the quarter, Shopee accounted for over 20% of our total SPayLater portfolio with this figure as high as 35% in some markets.

In Thailand, we are testing a new product to ShopeePay unlimited card. It lets users pay with their SPayLater balance at any merchant that accepts our payments, further expanding at a later use cases. The stand-alone ShopeePay app remains a key pillar of our strategy to grow Monee beyond Shopee, serving as a one-stop platform for user payments, credit, insurance and broader financial needs. In the second quarter, monthly transacting users on the map more than doubled. The ShopeePay app is currently live in Indonesia, Thailand, Malaysia and Vietnam, and we will launch a similar stand-alone app in Brazil soon.

In summary, Monee delivered another strong quarter with broad-based growth across our products and markets, the advances in our risk capabilities are compounding. Each improvement helps us serve more users serve them better and reach further beyond Shopee. We are still at the early stage of growth. Only a fraction of the users across our ecosystem are using Monee's financial products today and the credit penetration remains low across our markets. This gives us great confidence in Monee's long-term growth and earnings potential.

Next, turning to Garena. Garena delivered another strong quarter with bookings growing 15% year-on-year with profitability remaining healthy and growing well year-on-year. Free Fire anchored this strong performance, now in ninth next year, it is still expanding its reach and scale globally, continuing to draw in over 100 million average daily active users. Free Fire's longevity comes from a single discipline: we keep the experience fresh with the new game play and the content and we make it feel both local to the communities who play it and enjoyable for a global audience.

A great example this quarter was Undersea Mystery, an ocean-themed campaign inspired by Songkran, Thailand's water festival. We integrated the theme in the map itself, creating a gateway into a new undersea realm. This extended battle ground gave players a fresh territory to explore and fight over and the opportunity to hunt for powerful gear hidden in the hydro zone and fishing pond across the map. This continued reinvention of the core game play keep players engaged over time.

We also rode the World Cup wave to build excitement and engagement with our players. Our Fire kickoff campaign wove football into the map itself, turning part of it into a football field. Eliminated players were sent to a one-on-one football showdown for chance at redoing the match. And the new football form that players turned themselves into a football to speed across the map and pull off surprise plays. The campaign also resonated well beyond games, the original campaign song, Booyah Olé, became a standard organic driver of social engagement, generating over 350 million social media views.

I'm also very excited about what lies ahead for our portfolio. We announced the two mobile games, both built on strong globally recognized IP, Palworld Online is an open-world multiplayer survival adventure game developed and published by Garena and their license from Pocketpair, and Monster Hunter Outlanders is a survival hunting action game developed by Tencent based on Capcom's iconic franchise. Taken together, these titles show how Garena expanding into new genres, strengthening our development and publishing capabilities and deepening our relationships with top global partners.

In summary, Garena delivered another strong quarter. Free Fire is still proving itself as an evergreen franchise, and we continue to work towards diversifying our portfolio. We remain committed to delivering the high-quality experiences our players know us for. In conclusion, this quarter's strong results underscore both our financial discipline and the strength of our business. This promising momentum gives us greater confidence for the rest of the year.

With that, I invite Tony to discuss our financials.

Thank you, Forrest, and thanks to everyone for joining the call. For Sea overall, total GAAP revenue increased 48% year-on-year to $7.8 billion in the second quarter of 2026. This was primarily driven by growth in Shopee and Monee. Our total adjusted EBITDA was up by 11% year-on-year to $917 million in the second quarter of 2026. On Shopee, gross orders increased 27% year-on-year to $4.2 billion in the second quarter of 2026, and GMV increased by 28% year-on-year to $38.3 billion in the second quarter of 2026. Our second quarter GAAP revenue of $5.6 billion included GAAP marketplace revenue of $4.9 billion, up 49% year-on-year, and GAAP product revenue of $0.7 billion.

Within GAAP marketplace revenue, core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues was $4.3 billion, up 66% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistic services was $0.7 billion. Shopee adjusted EBITDA was up by 12% year-on-year to $255 million in the second quarter of 2026. Non-GAAP revenue was up by 59% year-on-year to $1.4 billion in the second quarter of 2026. Adjusted EBITDA was up by 13% year-on-year to $288 million in the second quarter of 2026. As of the end of June, our consumer and SME loans principal outstanding reached $11.1 billion, up 62% year-on-year. This consists of $10 billion on book and $1.1 billion off book loans principal outstanding. Nonperforming loans past due by more than 90 days as a percentage of total consumer and SME loans was 1% at the end of the quarter.

Garena bookings grew 15% year-on-year to $764 million. GAAP revenue was up by 34% year-on-year to $747 million. The growth was primarily due to the increase in our active user base and deeper paying user penetration. Garena adjusted EBITDA was up by 17% year-on-year to $430 million. Returning to our consolidated numbers. We recognized a net nonoperating income of $66 million in the second quarter of 2026 compared to a net nonoperating income of $83 million in the second quarter of 2025. We had a net income tax expense of $251 million in the second quarter of 2026 compared to net income tax expense of $144 million in the second quarter of 2025. As a result, net income was up by 11% year-on-year to $458 million.

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

[Operator Instructions] Our first question comes from the line of Piyush Choudhary with HSBC.

Congratulations, management, on great set of results. Two questions. Firstly, on Shopee, your investments are delivering results on the growth, so can you talk a little bit about outlook for GMV growth? And are we behind peak investments as margins have improved sequentially? Is the unit economics improving across VIP and content? And should we expect Shopee margins to improve? Or there could be volatility in second half due to seasonality? That is first question.

Secondly, can you give us an update on AI initiatives like last time you mentioned about AI shopping assistant for buyers, how have been the pilots? And for sellers on your platform, what initiatives you have taken and benefits observed?

I will take this question. If you look at the Shopee outlook for GMV growth, we still see quite good growth in Q2 as we shared in the opening. We still see the trend continues in the coming quarter. The growth has been doing well across our markets in South Asia, Taiwan and also Brazil. If we look forward for the full year, we remain well on track and confident of achieving our full year growth outlook of around 25%. And that said, we want to make sure that we also anticipate the potential ForEx headwind as well. As you can observe that many of our market has weaker currency against U.S. dollars. Q3 and Q4 also have a higher GMV base. But again, we still believe that we are able to achieve the guidance we gave before of around 25%.

In terms of investment we are doing for the few initiatives that we shared before on the VIP, on the fulfillment, on our logistics, et cetera. In general, we see our unit economics have been improving quarter-on-quarter. I think for our content businesses, which we shared that we did an investment for a period of time. If you look at the unit economic has been as good as the platform already. The new initiative, although we're still in the investment phase, but in general, we do see a positive trend on the economic improvement. And also in general, what we are doing is less very CapEx-heavy investment even with the fulfillment, we usually take a CapEx-light approach that we don't own the for fulfillment centers. But usually, we rent the place with relatively light CapEx to enable the growth there.

In terms of the margins, I think we shared our full year ambition of achieving $1 billion in adjusted EBITDA. For the AI initiatives, we are doing quite a lot of work over the past few quarters, both on buyer and seller side, as you mentioned. We are launching the IM assistance for sellers in quite a few of the markets. Essentially, instead of the seller talk to key account managers, the IMs as we call it. There is a digital IM that they can talk to, which can help them to answer many questions or many analysis they want to do with their shops. This is also 24 hours available, of course, compared to key account manager, usually not available 24 hours by 7. I think just one of the examples that we're working with the sellers among many others.

On the buyer side, we spend a lot of effort on both helping the ads have better conversions, which reflects in our ad take rate improvement over time, but also just general conversion for our search recommendations. We have been rolling out our new GR algorithm, generative algorithm for recommendation and search, which gives us a meaningful improvement on the conversion rate that we observed.

We're also doing pilot work on AIGC on content. If you look at our platforms, we have a lot more content can be generated by AI now, which can be used to do a personalized targeting for our buyers to improve the conversion as well, and many other work that we are doing. I'm just sharing with you on top of my mind.

Your next question comes from the line of Alicia Yap with Citigroup.

Congratulations on the strong set of results. I wanted to follow up a little bit on the e-commerce Shopee question. So can management elaborate a little bit the outperformance this quarter and also the profitability trend for Brazil, Taiwan and Southeast Asia and also the latest competitive landscape there?

And then on your guidance. I know that you mentioned the 25% is unchanged for the GMV growth, so in the case that if the GMV were to further exceed the guided growth rate, is it suggested that there is also further upside on the EBITDA for the second half? And then lastly, on the fulfillment investment cycle. Just wondering where are we in the time frame? Are we getting closer to what we wanted to invest? Or are we still in the early stage of the investment cycle for the fulfillment center?

Across the market, we see relatively good performance, both on growth and profitability. But I don't think it's a single market trend, but relatively across the market. Regarding the competitive situations, we do observe the competitive situation to be relatively stable at this point in time. And we are able to maintain our market share. In certain markets, we are able to gain market shares as well over the quarters for South Asia and Taiwan.

For Brazil, we also observed that our growth is well above the market growth levels. And we believe we're growing faster than our close competitors as well there. Regarding the balance between growth and EBITDA, it's always a question on what's the best balance between the growth and EBITDA, and I don't think there is simple answer there. I think something we always observe both on how much we can optimize internally and also look at how fast is the market growing, and of course, look at the competitive landscape to do this balancing.

At this point in time, we have been seeing the competitive situation to be relatively stable, as I shared. So the main driver of how the balancing work will lie on how we see the market growth rate look like in the rest of the year and how much we can improve our efficiency internally for this.

For the fulfillment, we believe there's still quite a lot of room for us to improve, to further penetrate on the fulfillment businesses. I think right now, both in South Asia and Brazil and Taiwan, we are still ramping up the fulfillment sizes. For example, I think we shared that our fulfillment grew more than 20% quarter-on-quarter. In quite a few markets, it's more than double-digit already of our businesses. But still, if you compare the size of our procurement with some of the other players in our market, especially in Brazil, or compared with the sizes of the peers in other markets, if you look at the few players with fulfillment businesses and marketplace, we're still much smaller as the size compared to them.

And with the good benefits we see from a fulfillment both on reducing the speed of deliveries and enhance the buyer conversion and also reduce the effort of sellers selling our platform, we do believe this is a good investment we are taking for the -- for our platform. And also, as I shared in the earlier questions, our fulfillment economy has been improving quarter-on-quarter, driven both by the fact we are able to optimize the cost structure. I think it's a learning process and also just take time to optimize the operations just in general. That's one.

Also, as we grow the scale with more and more seller joining the fulfillment businesses, it's actually, we have better scale advantage on that. And number three is also because there are more and more buyers recognize the fulfillment businesses that we are offering. This gives us a better economics over time. Another thing that's important to point out is that we are also doing a lot more integration between fulfillment and SPX. So essentially to reduce the frictions between how the warehouse -- the items in our warehouse moves across the entire value chain.

So it's -- so we can realize the cost synergies and cost benefits by running both the warehouse and the logistics together. And all these things help us to build the fulfillment businesses and helping us to gain the advantage of the overall platform. Yes, again, we run fulfillment business in relatively light CapEx fashion that we don't own the land, we don't own the warehouses. When we start a new fulfillment center, we do relatively light CapEx to enable that. We are also experimenting more automation with our fulfillment centers, which actually reduce our cost to run as well, but that's still in the early stage. We will share more when we scale more to our fulfillment centers over time.

Your next question comes from Divya Kothiyal with Morgan Stanley.

My first question is on the e-commerce side. We've noticed that both Shopee and TikTok shop have raised commissions in several ASEAN markets this year. Could you talk about how much more upside do you think there is for this? And can you confirm if ASEAN e-commerce is now profitable? And is that something that has specifically driven the guidance upgrade for e-commerce overall for this year?

And my second question is on fintech. Where do you expect Monee's margins to really stabilize? We did see sales and marketing expenses continue to rise. When should we expect Monee's EBITDA growth to reaccelerate to more healthy levels? And could you maybe just talk about any guardrails we should be mindful of in terms of NPLs, provisioning, especially as you're acquiring new users.

When we look at the take rate, we look at take rates from multiple angles. I think one is how much the take rate is reinvesting to grow the ecosystem, which is very important for us to look at. That's number one.

Number two is we look at how our price competitiveness is in our platform. So essentially after take rate, do we still maintain a similar gap of price leadership or not compared to the other platforms. Number three is we also look at the price of e-commerce essentially on our platform versus the offline pricing. Number four, we also look at what does it mean for sellers' profitability.

I think we put all the things together in terms of consideration for the take rate. From what we observed so far, we have been saying very healthy ecosystem even with the increase of take rate. And the reason for that is that we reinvest a large part of the take rate to the ecosystem growth as well, and also that we're able to help the seller to operate online more efficiently over time with the combination of other things, our price is still very competitive, not only compared to the other marketplaces in our market, but also compared to the offline alternatives in the market.

And going forward, we still see opportunities to increase our take rate, not only from commission, but also from the paid ads we have been able to penetrate more and more over time. Although you can argue that the fixed commissions probably has -- the pace of the fixed commission increase probably will be less than we observed before. But again, there is still room for us to increase the overall take rate by both helping the sellers to operate more efficient, but also helping the sellers grow their volumes by reinvesting part of the things to the ecosystem and also increase the conversion potential from the buyer side. With all the things together I think we're able to grow this even more over time.

On the Monee margin question, if you look at individual countries of the Monee businesses, if you look at the EBITDA over the balance -- over the outstanding ratios, it's been relatively consistent. Our NPL has been relatively stable as well over time. I think the -- but typically, when we operate, we look at by product, by countries, by segment. And the shift of the retail assets is primarily driven by the mix of these things.

For example, the certain countries, for example, let's say, in Thailand or in Malaysia, which is a later country that grows more than the previous countries, the overall ROA is slightly lower, so which kind of like we mix together, it reflects to the overall numbers. For example, some of the off-Shopee SPL lending growth, which is quite meaningful, more than 20% of the total SPL already, as Forrest shared in the opening, has naturally lower ROA compared to the on-Shopee SPLs.

For example, we have been trying to penetrate more to prime segment users, which naturally have slightly lower interest rate, et cetera, and all those growth are intentional. And as you observed from the numbers that it does require some investment, sometimes when we grow into the segment and sometimes, it does mean that we are able to grow the outstanding a lot more, but we're slightly lower ROA compared to the previous segment or countries or products we focus on. So we actually see this as a positive movement rather than the negative view out of this.

Our guardrail is very simple. We want to maintain stable NPL for the segment, the product, the countries when we look at it. And when we grow new segments, new product, new countries, we wanted to make sure it brings a positive return of the assets to us. That's why as a consequence, we always see that our absolute EBITDA, absolute profit from Monee has been growing quarter-on-quarter.

Your next question comes from John Choi with Daiwa.

Congrats on a very strong quarter. I want to focus on a little bit on Shopee's advertising take rate. I think Forrest also mentioned in his prepared remarks, that ad take rate was pretty strong for a few reasons. But I think it was up by more than 90 basis points. Like how further upside do we see? And I think you guys also mentioned the advertisers seem to be more keen and then taking up more of this. So what are like the AI technologies that we're implementing to further improve this ad take rate? And how much more room do we see?

And my second question is on Monee, particularly for Brazil. I think also in the slides, you also said you guys are going to launch something, a standalone app in Brazil. What will be the strategy? Should we be expecting somewhat similar to the Southeast Asia market?.

On the ad growth we do see a pretty good growth on the ads as we shared in the remarks. I think there are a few things helping the ad growth. I'm just listing some of the examples. One of the things smart voucher, which is we kind of combine a personalized voucher from a buyer together with ads, so we enhanced the seller's ad traffic, increasing the purchase conversion.

Another example is we have the Shop GMV Max smart diagnosis tools. So essentially this AI technology reports and tools to help the sellers to analyze how can they have better return on the ad. It's leveraged on the AI capability to analyze the ad's performance and drive improvement. We also have in-depth all these insights for Brand Max. This feature essentially allows the more seller to view the number of shoppers in each stage of their purchase journey, and how does the shopper move between stages.

This will give them a more robust and algorithm-driven branding solutions to capture the buyers better across their life cycles with the seller. And on top of that, there's also quite a lot of fundamental improvement on the algorithm for the ads, both on how can we match the buyer's intention to the app products better. I think that's where the AI-based algorithm, the GR algorithm helps quite a lot when we come to the matching part.

The other part is the content presentation. We are using a lot of AI tools to create better personalized content for the user when they see the ads. So all this in combination helps our asset rate to improve. In the coming quarters, we still see that meaningful potential to increase the ad take rate, given that many of the tools, many of the algorithm we're implementing are still in progress. We still -- we can see a meaningful optimization potential while we are doing more experiments, while we are optimizing everything further in the coming quarters.

For Brazil, on the Monee side, we do believe that Monee has a big potential in Brazil. We are seeing very good growth in Brazil for our lending businesses in the past two quarters. We were launching an app which is similar to ShopeePay app in Brazil with the CFI license, which means we will be similar to what Mercado Pago or other players in the market can offer in Brazil. We believe that Brazil is quite a big market for financial service businesses, which is proven by a few other players in the market with our e-commerce user base, our e-commerce data and also with our better credit scoring algorithm that's proven in Asia already, but of course, we customize for Brazil flavor. We are able to broaden our product in Brazil over time.

If you compare what we offer and what the other play offer, there are many low-hanging fruits that we believe that we can capture just by doing the right product structures, integrating the right data in our platforms to better credit scoring users. And just also with the license we acquired, which is kind of as good as the others already in the market.

Your next question comes from Navin Killa with UBS.

Two questions from me. Firstly, on the e-commerce business. So obviously, we have seen the margins have stabilized over the last couple of quarters after inching down through the later part of last year. I just wanted to understand from here on and back to your medium-term kind of aspiration of 2% to 3%. If you could help us understand the path, the time frame and how you get there. So that's, I guess, just a question on longer-term margin evolution for e-commerce.

And secondly, on Monee, you did mention, for example, that the average loan size is up some 20-odd percent compared to last year. Now as your loan ticket size increases, does the credit risk also increase? Or if I could also just understand what the time frame of these loans is, the duration of the loans is to get a better sense of how the credit risk is being managed with a larger loan book for a customer.

We still believe that 2% to 3% is quite within our reach for the year. EBITDA percentage. I think in fact, the sum of markets are well above that. I think the balance between growth and profitability is something I shared in the previous answer. We do believe this is still a dynamic process on how do we make sure we capture the potential of the growth of the market versus taking more profit out of the ecosystem. I think this is something we'll balance over time. But the path -- if you look at the numbers, the path from where we are to 2% to 4% is relatively straightforward.

Now we are 0.67% or so, and we're talking about 1-plus percent to get where we are. And part of that will come from -- over time, we don't need to invest so much in many of things we invest in. Like many of the programs we are doing right now, it will get mature over time. So I think we just invest less into it. Part of that comes from our cost improvement, fundamental cost structure improvements, for example, our logistics, our fulfillment, cost structure improvements over time.

Part of that comes from better take rates from either ads or other forms. I think if you put that number together, we are really not too far. And we have found this in some markets already for this. We do see, as you mentioned, the outstanding per user increase year-to-year. I think part of that is because we are reaching out to a new prime segment of users who naturally take bigger ticket sizes. Part of that is also our country expansion. Some of the country we grow more recently faster than the others, has a higher income capital in the market.

With all that, we do see a stable credit risk within the country, within the segment, within the product. So we didn't see any correlation between the increase of the outstanding per user and the increase of credit risk here. The duration of the large loan -- I mean it depends on the product and countries. Some can be as long as 18 months, some of them can be 12 months, et cetera. But that's a relatively small percentage for very good client users or for some specific lending products like the offline motorcycles that require a longer period.

Your next question comes from Jiong Shao with Barclays.

Please let me add my congrats as well. I have two follow-up questions around e-commerce. The first one is that you talked about a full year '26 EBITDA to be over $1 billion. That would suggest a higher EBITDA for the second half than the first half, which is different from last year. I think last year, the second half EBITDA was lower than the first half, so I was hoping you can talk about the drivers behind that phenomenon this year compared to last year. Does that also imply that perhaps your margins may be better in the second half than the first half as well?

My second question is back to Brazil. One of your key competitors in Brazil talked about the momentum they are seeing by lowering some of the take rates there and lowering the free shipping threshold. But that clearly hasn't stopped you from growing very, very fast. Could you just talk about sort of your profitability outlook in Brazil in the coming quarters and years?

As you rightly pointed out, we share the goal of more than $1 billion EBITDA this year. If you do the math, it does mean that in the absolute terms, our EBITDA for second half of the year will be higher than the first of the year. Of course, partially because of the growth of the market. It's actually the overall GMV, we believe that we still see quarter-over-quarter growth.

So the second half of the year, GMV base will be better than the first half of the year. Part of that comes from the continued work on the initiative we talked about. But again, e-commerce is a businesses that kind of we adjust the pace, adjust the monetization based on many parameters, as I shared earlier, based on how we are optimizing businesses based on how the overall business growth of the country and also based on the competitive business.

For Brazil, the -- yes, I think your observation is absolutely correct. We still see that our growth is well above the market in the country. And if you look at the price competitiveness, we are still very price competitive, a lot stronger than the competitors in the region, even after their change on the take rate and free shipping threshold.

So we believe that for e-commerce businesses, the fundamentals still holds. It's the price competitiveness of our assortment, it's the completeness of our assortment. It's a fundamental structure of cost to serve and its experience on how the buyers can discover the product and our platform and all those things help us to grow faster than the market in Brazil. And if you look forward, we still believe that Brazil has a long way to go in terms of e-commerce growth. We are hoping to grow in Brazil in a profitable fashion with the growth rate outpaced the market in the coming quarters.

Your next question comes from the line of Ranjan Sharma with JPMorgan.

Two questions from my side. Firstly, on the gaming. We discussed new publishing rights. Can you also help us understand which geographies do they cover? And then also early in the year, we talked about a possible Naruto collab coming back. If you can remind us when that's going to be? The second question is on fintech. We noticed that the provisions for credit losses have increased quite a bit this quarter. What are the trends that you are seeing in delinquencies? And how does that affect your loan growth going forward?

Ranjan, thank you for your question. I think for the new publishing games, like we specifically talk about two games this quarter, one is powered online and since this game is our self-developed game, so we're going to publish it globally. And then we probably were going to launch the game like market by market and gradually, but like the plan is we're going to -- this will be like a global publishing opportunity for us.

And for the Monster Hunter Outlander, this is a great collaboration between Garena and the Tencent. Tencent developed game and also work together with this fantastic IP owned by Capcom. We turned to launch in the market in like a market we are very familiar, like Southeast Asia, Latin America, like Taiwan, and potentially, we're going also to launch the game in Middle East and some more markets in the pipeline. So the target launch time it will be this year.

Yes. I think for the provision, it's primarily driven by the loan mix I think there are two components of our loan mix, we naturally have high provisions. One is the off-Shopee SPL and second one is the Brazil loan outstanding. Although Brazil, we have a very good ROA there, but it's a high interest, high risk market, so the higher mix of this two components contribute to the higher provision that you see.

This concludes our question-and-answer session. I would like to turn the conference call back over to Mr. KC Ong for any closing remarks.

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

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

Good morning, and good evening to all, and welcome to the Sea Limited First Quarter 2026 Results Conference Call. [Operator Instructions] And finally, if I would like to advise all participants that this call is being recorded.

Thank you. I'd like to now turn and welcome the call over to Rebecca Lee to begin the conference. Please go ahead.

Hello, everyone, and welcome to Sea's 2026 First Quarter Earnings Conference Call. I am Rebecca from Sea'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 use that complements our GAAP disclosures. For a 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, Sea's Chairman and Chief Executive Officer; Forrest Li, President, Chris Feng and Chief Financial Officer, Tony Hou. Our management will share strategy and business updates, operating highlights and financial performance for the first quarter of 2026. This will be followed by a Q&A session in which we welcome any questions you have.

With that, let me turn the call over to Forrest. .

Hello, everyone, and thank you for joining today's call. We have had a strong start to the year. In the first quarter, generated over $7 billion of revenue, representing 47% year-on-year growth. Adjusted EBITDA exceeded $1 billion for the first time. As we have shared before, 2026 is a year where we are leaning into growth investments to deepen our competitive moat while maintaining financial discipline. Our strong revenue growth reflects the effectiveness of these investments and we are already seeing unique economics start to improve for some of these initiatives. We believe this is the right approach to maximize long-term value, given the significant runway for growth still ahead of us in our markets.

With that, let me take you through each business' performance. Starting with Shopee, Shopee delivered another record second quarter, achieving new highs in GMV, gross order volumes and revenue. GMV grew 30% year-on-year in the first quarter. At the same time, we maintained financial discipline, generating an adjusted EBITDA of over $220 million. Our monetization strengthened further in the first quarter. Ad revenue grew 80% and ad take rate increased by more than 90 basis points year-on-year at paying sellers and their average ad spend will increase by around 35% year-on-year, reflecting the strong value that I see in our ad offerings.

Our results validate the operational priorities we have laid out for Shopee, improving price competitiveness, service quality and our content ecosystem. Our strong execution across its priorities drove user acquisition and engagement in the first quarter. Average monthly active buyers increased 16% year-on-year and the buyer purchase frequency grew around 12% year-on-year. We continue to deepen our structural moat across logistics, Shopee VIP and content. First, Logistics continues to be 1 of our most important depreciators. SPX Express remains 1 of the largest e-commerce logistics solution provider in our markets. We have developed strong capabilities to dynamically optimize per fee cost and user preference.

In the first quarter, we continued to scale delivery options serving different consumer demand while maintaining cost leadership. We have seen strong adoption of our instant and same-day delivery services. With greater economics of scale, we are seeing lower delivery costs or other for these faster services compared to last year. For example, in media, our instant delivery service can deliver orders as little as 2 hours urban areas. Order volumes for this service to over 35% in the first quarter with cost per order reducing by around 20% year-on-year.

During this service has enabled us to expand our product assortment into higher frequency categories. We expanded partnerships with major convenience stores and pharmacy chains such as [ Indomaret,] At the end of March, we had around 7,000 off-line stores available on our instant services. This has shifted more offline purchasing behavior online and into the shopping ecosystem. [indiscernible] using instant delivery enjoying greater convenience, and we are seeing such buyers spending more with better retention on shopping.

Beyond delivery, we are increasing our focus on fulfillment as a natural extension of our logistics capability. We are making good progress. In the first quarter, fulfillment order -- orders grew by around 25% sequentially. Fulfillment allows for faster and more reliable delivery while enabling sellers to operate and still more efficiently on our platform. We already see this happening with our fulfillment orders consistently delivering faster than the platform average. In Asia, over 1/3 of parcels fulfilled by us were delivered within the next day in March, much higher than the platform average.

The combination of fulfillment with our extensive delivery network allows us to drive significant improvements in both service quality and cost efficiency. For example, in Taiwan, -- our collection point network expanded to over 3,100 locations at the end of the fourth quarter, nearly 50% more locations compared to just a year ago. We leveraged our growing fulfillment capability to scale initiatives such as shipping directly to locker without additional packaging, improving speed, while reducing costs. With these efforts, average buyer rating time improved 12% in the first quarter year-on-year. We recorded double-digit GMV growth year-on-year in the first quarter in Taiwan keeping e-commerce and nutrition and strengthening our market leadership there.

Second, our shopping VIP program -- this subscription-based membership program continues to gain strong traction and drive user engagement. By the end of March, total subscribers across our Asian market surpassed 10 million up more than 40% from the previous quarter, with strong program retention averaging above 80%. Across all markets, -- our shopping VIP members have consistently demonstrated double-digit spending uplift after subscribing by as much as 30% to 40% in some markets. Shopping VIP members now contribute around 20% of GMV across Asia. During this success, we have rolled out our shopping VIP program in Brazil in April.

Third, our content ecosystem continues to grow healthily. In the first quarter, orders from live streaming and short-form video grew more than 50% year-on-year. These orders accounted for more than 25% of total physical goods orders in Southeast Asia. To further strengthen our content ecosystem, we continue to deepen our content partnerships orders driven by YouTube more than doubled year-on-year. Our collaboration with Meta is doing well with over 4.5 million affiliates across our markets up nearly 30% quarter-on-quarter.

In Indonesia, we have extended our metal collaboration to enable seamless product promotion and check out, not just on fiscal but also on Instagram. I would also like to highlight our strong performance in Brazil and the growing role AI is playing in our business. Brazil was our fastest growing market in the first quarter, while continuing to be profitable. We continue to outpace the market on GMV growth, driven by increasing active buyers, purchase frequency and average basket size. This strong performance was supported by solid fundamentals, including wide product assortment at competitive prices and our structural logistics cost advantage. We also made steady progress strengthening our presence in the upmarket segment, enabled by our strong logistics capability.

We continue to improve delivery time by more than 1 day in the first quarter compared to last year. We opened 3 new fulfillment centers, bringing our total to 5. These efforts allowed us to onboard more merchants especially to shopping mall, supporting stronger spending among buyers. In the first quarter, GMV from shopping mall sellers more than doubled year-on-year and now contribute around 15% of GMV. We remain confident in Brazil's long-term growth potential and our ability to further strengthen our competitive position in this market.

On to AI. We have taken a critical resource-oriented approach embedding AI into our operations to drive better outcomes for our users and greater efficiency across our platform. It is already making a meaningful impact. AI-powered enhancements to our search and recommendation algorithm has led to better product discovery. Our AI-generated content tools are helping centers create more compelling product listing. These efforts supported a 14% improvement in purchase conversion rate year-on-year in the first quarter. An AI-driven personalization and the targeting helped contribute to the strong year-on-year ad revenue growth we saw this quarter.

On the cost side, around 80% of customer queries are now handled by our AI chat board. AI usage helped reduce customer service cost per contact by around 30% year-on-year while maintaining high satisfaction rate. Looking ahead, we are exploring agentic AI experiences for buyers we are testing an AI shopping assistant that leverages purchase history and the preferences to deliver personalized recommendations and optimize savings. For sellers, we are building an AI agent that acts as a virtual business adviser providing diagnostics and actionable insights on shop performance.

Both are in early stages with plans to roll them out more widely over time. In summary, Shopee has had a break start to 2026, delivering strong growth while maintaining financial discipline. We are being deliberate about where we invest in delivering fulfillment, our shopping VIP membership program and user acquisition. We are already seeing some improvement in unit economics and we expect this to continue over time. Looking ahead, we are confident in the strength of our shopping ecosystem and our ability to execute our strategy. We are on track to deliver our 2026 guidance to grow shops annual GMV by around 25% year-on-year, with full year adjusted EBITDA no lower than 2025 in absolute dollar terms.

Next, moving to money. Money also had a strong start to the year with robust year-on-year growth across both revenue and adjusted EBITDA. Credit continues to be the primary driver of our growth. Our loan book reached $9.9 billion at the end of March, an increase of more than 70% year-on-year while maintaining stable asset quality. We continue to expand the credit business on 3 fronts. First, by deepening existing user relationship offering them more credit as we get to know them and their repayment behavior better.

Second, by acquiring new users, especially in segments with better risk for and greater affluence. These users tend to have better repayment behavior and higher borrowing capacity. Our campaigns to attract such new users with competitive pricing, higher limits and longer tenure are showing early signs of success. And third, by expanding our credit use cases beyond Shopee, an important runway for future growth. We are making good headway with off shopping expansion. More users are progressing from on shopping SPay Later to Off-Shopee SPay Later and personnel cash flow. Following strong momentum in Malaysia, we are also seeing good traction in some other markets.

Off-Shopee SPayLater loans in Thailand and Indonesia exceeded 20% of the SPay Later portfolio at the end of the quarter. Notably, we are seeing strong growth in higher-value categories such as electronics and 2-wheeler Indonesia, where installment credit plays a meaningful role in enabling such purchases. Taken together, these efforts resulted in strong growth in both user numbers and the loan outstanding per user. In the first quarter, we added 4.9 million first-time borrowers -- our active credit users crossed 38 million at the end of the quarter, an increase of more than 35% year-on-year. An average loan outstanding per user grew to around $250 at the end of the quarter, 25% higher year-on-year. Brazil has become our growth market to cross $1 billion in loan book size, growing over 250% year-on-year. The strong growth momentum was supported by a localized product we introduced last year combined SPay Later and the cash loan limit that aligns well with our Brazilian consumers utilize credit. This led to strong user growth with higher repeat usage where average loan outstanding per user more than doubled compared to last year.

SPay Later penetration on Shopee is around 10% of GMV in Brazil, well below our more mature market indicating substantial headroom for growth. We also obtained the SPay Later in Brazil during the quarter, allowing us to broaden the scope of financial services we can offer. We are still in the early stages of scaling this business in Brazil with a strong foundation in place to support future growth. Risk management remains our top priority. Our 90-day NPL ratio remained stable at 1.1% at the end of the quarter. This reflects the strength of our underwriting capabilities and the disciplined way we expand across users and markets.

Our deep understanding of our market and the borrowers allows us to respond quickly to macro changes. Our loans typically have short tenure, and we can adapt our product success, credit limit and the tenures in real time. These attributes enable us to adjust our risk appetite and optimize our asset quality as we feel.

In summary, Money continues to grow healthily, expansion into more user segment Off-Shopee use cases and early markets like Brazil are giving us a much larger addressable opportunity across our portfolio. We remain confident that Money will be a significant long-term focus contributor for [indiscernible]

Next, turning to Garena. Garena had a stellar start to 2026, delivering its best quarter since 2021. Bookings were up 20% and adjusted EBITDA grew 25% year-on-year. This performance was driven by the continued strength of Free Fire alongside a record contribution from Arena of Valor. In January, Free Fire launched a major collaboration with the popular anime Jujutsu Kaisen. As with our previous collaboration, we invested significant efforts in bringing core elements of the anime into gameplay. We transformed the parts of the map into settings from the [indiscernible] and introduce a current energy resource that players could collect to actively special character abilities.

For instance [ gogo's ] unlimited voice, 1 of the highest level techniques from the anime allow the players to draw their opponent into a separate domain for our one-on-one side. Clear resonates strongly with the contains attention to details and authentic visual effect. This collaboration generated over $700 million official content views making this 1 of our most successful IP partnerships to date. Taken together with the highly successful Naruto Shippuden collaboration last year, we have demonstrated our ability to consistently execute high-impact partnerships with global IP owners. We are also involving how we see our content globally. One of Free Fire's long-standing strength is our ability to hyper localize the game for players. This year, we have challenged ourselves to both localized and globalize some of these content, making it highly resonate for target markets and also enjoyable for everyone else.

A good example from the first quarter is our Ramadan campaign. In past years, this campaign was only launched in Ramadan off-service market. This year, we built it into a global event under a lost treasury fee. Clear from market celebrating Ramadan recognize this positive event catering to while players from other markets sold as the -- campaign that was new, interesting and plan to play. During matches players could fund treasured map triggering team-based submissions guiding them through hidden treasure locations. This highly interactive campaign resonated strongly across market, global social media platform impressions exceeded 120 billion up around 70% compared to last year's Ramadan campaigns. The strong response we got to this campaign shows our growing capability to take culturally routine events from local markets and expand them into globally resonate content. Global lining campaigns led us full resources, elevate content quality and deliver more frequent and distinctive experiences for our players.

Beyond Free Fire, Arena Valor delivered record high quarterly bookings in the first quarter in its 10 year of operations. The sustained success of both games demonstrates our unique ability to operate games well across general in multiple markets and over long periods of time. Garena has started 2026 with great momentum. We will remain focused on delivering fresh experiences and building the long-term value of our game portfolio.

In conclusion, we have started 2026 well with each business expanding its addressable opportunity while strengthening its competitive position. Meanwhile, across our ecosystem, we see the AI era creating significant opportunities for a company like ours. We've established scale, reach cross vertical data and deep local expertise. We are investing deliberately to capture the growth runway ahead, and we are confident of continuing to deliver robust top line growth while improving our adjusted EBITDA year-on-year.

With that, handing to Tony to discuss our financials.

Thank you, Forrest, and thanks to everyone for joining the call. For Sea overall, Total GAAP revenue increased 47% year-on-year to $7.1 billion in the first quarter of 2026. This was primarily driven by growth in Shopee and Money. Our total adjusted EBITDA was up by 9% year-on-year to $1 billion in the first quarter of 2026. On Shopee, gross orders increased 29% year-on-year to $4 billion in the first quarter of 2026, and GMV increased by 30% year-on-year to $37.3 billion in the first quarter of 2026. Our first quarter GAAP revenue of $5.1 billion, excluded GAAP marketplace revenue of $4.5 billion, up 44% year-on-year and GAAP product revenue of $0.6 billion.

Within GAAP marketplace revenue -- core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues was $3.8 billion, up 61% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistic services was $0.7 billion. Shopee adjusted EBITDA was $223 million in the first quarter of 2026 compared to an adjusted EBITDA of $464 million in the first quarter of 2025. This year-on-year change primarily reflects our increased investments in delivery fulfillment, our Shopee VIP membership program and user acquisition, partially offset by higher amortization.

Money GAAP revenue was up by 58% year-on-year to $1.2 billion in the first quarter of 2026. Adjusted EBITDA was up by 14% year-on-year. to $275 million in the first quarter of 2026. As of the end of March, our consumer and SME loans principal outstanding reached $9.9 billion up 71% year-on-year. This consists of $8.8 billion of book -- off-book and $1.1 billion of off-book loan principal outstanding. Nonperforming loans past due by more than 90 days as a percentage of total consumer and SME loans was 1.1% at the end of the quarter. Garena bookings grew 20% year-on-year to $931 million. GAAP revenue was up by 41% year-on-year to $697 million. The growth was primarily due to the increase in our active user base and deeper paying user penetration.

Garena adjusted EBITDA was up by 25% year-on-year to $574 million. Returning to our consolidated numbers. We recognized a net nonoperating income of $62 million in the first quarter of 2026 compared to a net nonoperating income of $89 million in the first quarter of 2025. We had a net income tax expense of $214 million in the first quarter of 2026 compared to net income tax expense of $136 million in the first quarter of 2025. As a result, net income was up by 7% year-on-year to $438 million.

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

[Operator Instructions]

Your first question comes from the line of Alicia Yap of Citigroup. .

Congratulations on the strong results. I have 2 questions. First of all, on e-commerce, -- so looking at your 30% GMV growth, 29% order growth seems to be suggesting is a decent increase in the ASP could management share what you have offers during this past quarter. So how much of the strength of the GMV is attributable to your deeper penetration in the higher end user and higher ASP product in Brazil obviously follow your strategic expansion in your warehouse fulfillment. And how much of that is could be attributable to the higher stickiness of your VIP members across the Southeast Asia region and also Taiwan.

And then following up on that is that despite delivering the 30% GMV growth management still maintained the full year GMV growth of 25%. So is that because of the higher base of the second half of 2025? Or is it management being conservative in light of the macro uncertainty. So any color management could share or elaborate would be helpful. And then second, very quick 1 is on your gaming, very strong booking growth. So do you expect this strong rebound of Arena of VALOR, could set a tone for the continued strength and rebound of the game for the rest of this year? Or is it just more a one-off due to the seasonality and promotion? .

On the growth for Shopee, we see a combination of growth from both Brazil and Southeast Asia. The -- overall, Brazil does grow slightly faster than Southern Asia, but I think it's probably not only driven by the Brazil side. I think as you already pointed out, we try to have more fulfillment businesses in Brazil. We also have more more sellers running us in Brazil, which contributes to a high-end user segment attractiveness. The Shopee VIP has been driven quite a lot of growth in Asia as well as far as mentioned in the opening.

For the GMV guidance, Q1 has Ramadan and also both -- and also 10 New Year fall into the quarter. We see very good seasonality attribute positive growth. We also see that the -- many of the initiatives we implemented from last year, including the VIPs, including the instant delivery, including the AI-enabled better discovery that we roll out to our platform. All this contribute to kind of a better growth than we expected in Q1. As of the future guidance, I think we will observe how the market evolves. It's a bit early to sort of forecast the full year at this stage. We will communicate with the market as we see better indications from the growth trend in the market. .

Regarding Arena, we are very encouraged by Arena Valor performance this quarter. Delivered record high bookings in Q1 in its tenth year of operation, which really speaks to the enduring appeal of the game and our team's ability to keep the experience fresh and engaging for players. This is not a one-off. We have been making deliberate investments in content updates and community engagement that are driving real results. With the content packed year to celebrate the game's tenth and anniversary, we expect 2026 to be a record year for Arena of Valor.

That said, Q1 is indeed a seasonally stronger quarter for gaming benefit from a Lunar New Year, which is a key engagement period. So we are mindful of that, we're looking at the sequential trend -- as you know, gaming performance can also vary from quarter-to-quarter depending on the timing of content release, the collaboration and the seasonal events, but the underlying health of the franchise in terms of user engagement and paying user penetration give us confidence. We remain confident in delivering strong year-on-year bookings growth for Garena for the full year and Arena of Valor reaching new highs in its tenth year, give us even stronger conviction that we can do the same with Free Fire over the long run.

Your next question comes from the line of Divya Kothiyal of Morgan Stanley.

My first question is on Brazil. So the growth in Brazil has been clearly very strong for Shopee. But how should we think about the margin cadence there for this year, especially since we are seeing the market leader has dialed up their own investments in the market. Brazil has been profitable this quarter, but would love to hear your thoughts on how you're thinking about Brazil profitability when you give the full year guidance for e-commerce EBITDA targets?

Also, are there any early learnings from the loan book ramp-up in Brazil? And how different is the returns versus ASEAN? So that's my first question on Brazil.

My second question is on e-commerce take rates. We're seeing e-commerce take rates have risen very consistently this quarter. especially in ASEAN. I would like to hear your perspective on how much of these increases are being reinvested back into seller base or consumer incentives. And are you seeing ASEAN e-commerce margins actually improve. Also, given the rise in cost inflation, there has been some pushback by sellers in markets like Thailand about these hikes. But are you broadly seeing these increases being well accepted by sellers? Or are we kind of reaching a cap on commissions per se .

In terms of the Brazil growth, we see -- as you rightly pointed out, we see very strong growth in Brazil. If you look at Q1, we grew well ahead of the market growth in the market, which enable us to gain better market shares, which in turn gives us better scale to drive down our cost to serve in the market. We have been possible in Brazil for the last few consecutive quarters. I don't I don't foresee any change towards that at this point in time. We will still continue to grow healthily in Brazil, like with the profitable kind of margins as we see right now. But again, while saying that we do commit to investing to Brazil, especially for the few areas we mentioned, like the fulfillment network that we are building.

We are further expanding our same day deliveries in Brazil. We're also launching the -- we also have the VIP program in in Brazil as well. I think all those will be rolled out in Brazil over time to drive further growth. In terms of the loan to interest we doing very well in Brazil on the loan side. We actually have more than $1 billion outstanding in Brazil already, which is kind of very high growth year-to-year. If you look at last year Q1. I think the key driver for us is to localize the products we didn't take the Asia products to take to Brazil. we localize the product. For example, we have a single flexible limit, the user can draw on across the estate and the personal cash loans based on what they need.

We also spun up efforts on localized data sources, not only from the shopping data, but we also draw data from the open banking network in Brazil. which give us a pretty good impact in terms of the risk profile. I think that's part of the reason that we see better risk in Brazil, which enable us to expand more user pools while maintaining the profit profile in the market. Overall, we are seeing the very early days of the market penetration revue for the lending businesses. If you compare our sizes versus some of our peers in the market for financial services. There's a huge room ahead of us in terms of growing the businesses in Brazil.

In terms of the e-commerce take rate, I think the simpler way to look at this was we thus increase positive take rates. We also have our EBITDA margin reconvey similar to purpose quarter. So a big part of that will be invested into the market to drive the growth. Again, the area we invest in the few areas mentioned, the fulfillment network, we're building the VIP programs, et cetera. But generally, we see that in most of the markets, we see a good margins quarter-over-quarter for our ASEAN market. On the seller commission reactions from the market -- the most important thing for us is to look at how the seller commission impact the pricing. We look at the impact of commission increase on pricing compared to the peers in the online market, and we also compare with the pricing compared with the offline market.

Pricing is 1 of the most important thing for us, as we mentioned our time. We still see a very price competitiveness in our platform. I think going forward, I think we will still kind of look at the dynamics and decide what's the best way to manage the commission part. But again, I think the most important thing is we are able to deliver profit to the sellers. The profit is depending on, number one, is how much commission we're taking. Number 2 is how much cost they are running on our platform. Number three, what the volume we are driving for them or platforms with slightly higher commissions, we spend our effort on reducing the cost of running businesses on our platform. For example, we offer AI-powered chatbot for the seller, so they can -- so they can custom customer service with the buyers automatic without sort of hiring more customers agents.

For example, we help them agnostic their businesses a lot easier with our AI-powered agents in our seller center, et cetera. And at the same time, as we always share that with still fast growth in our market, seller has a bigger pie to draw from. So all this contributes to sort of a healthy ecosystem when we look at the seller commission plan.

Your next question comes from the line of Navin Killa of UBS.. .

Congrats on the strong results. I had a couple of questions. So if I look at your e-commerce, I guess, absolute EBITDA in Q1 this year compared to Q1 last year, there's obviously a moderate decline. I just wanted to understand if you could help us kind of get a better sense of where this decline is coming from geographically, if it's split between, let's say, Brazil, Taiwan and Southeast Asia. And also as things hopefully improve over the next couple of years, how will the state of that be in terms of the magnitude of growth in EBITDA coming from each of the regions? And secondly, on fintech, again, the margins have obviously been inching down. Is there a steady state number that we should be looking at and the time frame over which you can get there. .

First of all, let's start with the e-commerce side. I think you're absolutely right on the slightly lower EBITDA year-to-year I think the other way to look at this was that if you look at last quarter in Q2 -- in Q4, 2025 we do see a slight increase on the EBITDA from Q4 last year to Q1 this year. I think there are many reasons driving the dynamics here. And last year was the first year that Ramadan falling to Q1, which is difference in energy that we had for many, many years. I think there were some adjustments that we have to learn from how does this let impact the businesses. I think we have better expense this year compared to last year.

I think part of the reason also because we launched a bunch of initiatives to further drive the growth this year, as we shared across the core. And some of that started from later part of last year, which kind of continued from Q1 -- continue to Q1 this year. For this near term in 2026, I think we shared with our guidance, we expect a pretty good growth of 25% with the bottom line EBITDA, at least not worse than last year. I think we will see how this evolves over the quarter. In terms of the medium to long term, we still maintain our judgment that we believe that 2% to 3% EBITDA margin is something we target to achieve.

In terms of the fintech, the fintech margin, 1 thing we look at very closely is our absolute return we will grow our loan outstanding. We would like to make sure that additional loan will bring a positive EBITDA in absolute terms. We do recognize that the EBITDA, you compare with the outstanding asset ratio, in my [indiscernible] that eventually might go down a bit over time. If you look at over the quarters, I think, largely driven by the mix of different countries and different products early market, for example, like Indonesia, [indiscernible] things does have a higher ROA compared to the market that's coming a bit later to the portfolio. If you look at, let's say, Thailand or Malaysia, et cetera.

So this drives -- if you look at the ratio, slightly lower as time goes. I think at this point in time, the business is really early, we see a huge expansion in front of us especially if you look at some of the new market growth, even if you look at Thailand, Malaysia, the Brazil, we talked about, there is a big potential ahead of us. And if you -- just now we talk Brazil to compare our outstanding compared to the PS outstanding, that's a huge room for that we also try to develop the non-shopping ecosystem, for example, I think for mentioned the telecom stores, the 2-wheel stores. I think all this are pretty dynamic. I think it's too early to guide a steady-state number at this stage as it's pretty much impacted by the country and product mix.

Your next question comes from the line of Jiong Shao of Barclays.

I have 2 as well, if I may, I'm going to just ask 1 at a time. Firstly, would you be able to just talk about the potential impact from a higher fuel prices? I know the conflict in Middle East started in March, you probably did not see too much of an impact in Q1. But if the oil price stay at current level for for longer, how will that affect your cost? Would you be able to pass on some of the cost to either the sellers or consumers? Any comments would be helpful. Then I have a second question. .

Yes. The -- it's clearly something we look at very closely in terms of the oil price impact to our businesses. I think there are a few degree of impact when we look at this, the first degree of impact is just absolute oil price. -- it does impact our operation costs. I think the good thing is that -- we leveraged quite a lot of the subsidies on the -- our countries where it helped us to absorb the cost increase in many countries. -- especially the last mile delivery, which is the largest part of our -- the delivery cost.

We also work closely with our partners, like, for example, our line haul partners our airline partners to match the costs together. So all in all, if you look at absolute costs, it does have impact in our cost. But we believe we can manage it within the guidance that we're giving out. And also in terms of timing, you're absolutely right that the Q2, we'll probably see more impact than Q1 in terms of costs. I think there's a first degree of impact. I think second impact is potentially, this might impact the -- essentially the spending power in some of the countries if they have to spend more money on the -- the gas stations.

I think generally, we are seeing a moderate impact on our platform. I think the most important reason for that is -- our platform is actually -- is the cheapest platform, you can find the products that people are essentially needed. So when people are looking for savings. Actually, we look at us more. Our platform is also a more essential product platform rather than something that people buy a luxury product from or all discretionary spending less percent in our platform compared to, let's say, off-line spend, et cetera. So all this helped us to show the impact from the second degree impact that we see.

Okay. Great. Very helpful. My second question is about your fulfillment buildout, you talked about adding 3 fulfillment centers, I think, in Q1 in Brazil. Could you talk about some of your perhaps like near-term targets and long-term targets. For example, as you know, 1 of your peers in Brazil is adding, I think, over a dozen [ SCs ] this year in Brazil. So if you can share with some of your thoughts, both near and long term. And on top of that, the pace of the investment and is that you adding, let's say, some fulfillment centers this year and then next year take a pause to absorb some of the capacity then perhaps add more after that. So just help us understand the the pace when you build out your fulfillment infrastructure from relatively low base, from timing wise compared to low base compared to our competitors, obviously. And any sort of timetable for getting returns of these investments .

So on the fulfillment businesses, I think, especially for Brazil, I think that you referred to. We do have our expectations on growing more percent of businesses from fulfillment as we build out. Since we started rest not too long time ago, we are still in the early stage of building out the fulfillment businesses. I think -- the -- typically, we actually don't overbuild too much. So the -- our capacity utilization in our -- center is relatively high. And I think the core reason for that is we are able to project -- predict how much of the volume from fulfillment well ahead of the time, then we build our fulfillment center according to the time table. So it's probably unlikely that we're going to do a lot this year, and we stop next year, then we'll while waiting for semester to be used, then we go again. I think more -- peer continuous process while we are building the fulfillment center.

And ultimately, we would like to have our equipment center the overall size is bigger than our growth competitors in the market in terms of absolute volumes. But I think it will take a few years to get there, giving -- to stop it later. In terms of the retail investment, the -- if you look at individual fulfillment centers Typically, the infrastructure, the CapEx is actually not that high as we don't own the fulfillment center itself, we typically run a fulfillment center. The CapEx essentially is to make sure the fulfillment center is well equipped.

So if you look at that particular product investment, the return on investment is pretty fast. It's not that long ahead of the time. The other product investment we're doing for the fulfillment businesses is more move the seller to be product fulfillment center and move the -- and advocate the buyer to understand the potent businesses that we have. So that's part of the ongoing investment we drive -- we used to drive business growth.

Your next question comes from the line of Ranjan Sharma of JPMorgan.. .

And congratulations on the results. Three quick questions from my side. Firstly, how do you see the economics of the VIP program will you consider optimizing the value offer to consumers or the subscription price charge to the customer. The second question is, given the momentum on Free-fire and Arena of Valor and the content coming in the coming periods. How should we think about the growth of the gross bookings this year?

Last question is, can you help us understand how you evaluate the intrinsic value of [indiscernible] We know you have $1 billion buyback, but you have only executed $170 million or so despite the stock price easing $78 at some point. So will help to understand like how you're thinking about the buyback going forward? .

On the VIP program, the -- I think there are 2 parts of the offering that we are providing to the market. product offering is the shopping offering, for example, the in some markets, if you join the VIP, you can get a [indiscernible], et cetera. Part of that is with our partner to the to our users, One of the key things we are working on is to expand our partner pool, so we can strongly offer the benefits to the -- to our users. For example, program that we offer to our users, which is very well accepted and like. There are quite a few other partners. We are going to announce actually not too far away we're working on the system integration, et cetera.

So all this -- all these partners offerings will help us in terms of the unit economics over time. But the -- and also for the pricing, we look at the pricing there is the potential to have a different tiering as well for the pricing. It depends on how the market reactions and how that you not look at for different segment users and also depend on what we have partnered with, et cetera. that -- at this point in time, we were still going to invest a bit more on the VIP program, given that the retention we see on the user base and also the uplift of the activities from the VIP users. But eventually, -- we do see VIP program can be an even more profitable program compared to the non-VIP program, giving the -- users, giving the ability for us to bring the benefits of our partners.

Your next question comes from the line of Ellie Jiang of Macquarie. .

For the gross booking for Garena for the rest of the year, at this moment, we remain very, very confident. And we think this year, we have a very strong growth. And we remain the guidance we gave during the last time earnings call. And for the -- in terms of your question of the buyback considerations as we shared in our earnings release, and we have actively bought back our shares, things last since last November, and we're going to continually doing so. And as we shared, we remain very confident about our 3 vertical businesses and also the strong growth potential of our market. So that's the key underlying considerations when we buy back our shares.

My apologies, Ellie Jiang.

I got 2, 1 as a follow-up on the prior question on Shopee VIP -- just wanted to have a better understanding of the current progress of the VIP members because clearly, you guys have been making pretty good progress on penetrating into many of the core operating markets. And it seems like it has reflected positively on both user frequency as well as for the ticket size. So going forward, what would be the key KPIs? Would it be that the percentage of penetration in several key markets, be it over a certain percentage of their total MAUs or -- would it be certain GMV threshold that you guys will be monitoring. Just wanted to get an understanding of kind of that investment kind of reflection sort of in the next several quarters.

So that's first part of the question. The second would be on money. So can management shed some light on the actual breakdown of the business, including, for example, the country mix, also on Shopee and off Shopee percentage point. Ultimately, the latest quarter of 71% year-over-year increase in consumer and SME loan principal outstanding was very impressive, especially given that you guys can control the loan quality at very high level. But can you talk about kind of the key factors in the upcoming years? What would be the key triggers to continuously contribute to such strong growth momentum for the loan book as a for revenue as well .

So I think the -- there are a few key numbers we look at, for example, the penetration of our GMV, the retention for our users, the -- and also the unit economics for the -- this part of the program. I think there are a few things essentially quite important for us to look at. I think the other key thing we look at is how many partners that we have in the VIP program, as I shared just now, it's important for make sure that we bring benefits to our users, not only from Shopee, but also from our partners as well.

We started Shopee VIP in some -- in [indiscernible]. I think we see very good progress there. As I think as we go out to more countries, we see essentially we learn more from the early countries and roll out similar learning to other countries. For the money businesses, -- the -- as I shared earlier, we started first in the early countries like Indonesia, et cetera, but the newer countries like Thailand, Malaysia or Brazil have kind of especially because they are later countries, they grow faster compared to the other countries in a way. So the share between the countries will dynamically adjust because of the timing of the rollout of our products. I don't think we give a precise country mix to the market.

In terms of the on Shopee and off Shopee -- On-Shopee is actually the -- on Shopee has -- was the majority when we started with. Now it's less than half of the business already. And even if you compare with the -- On-Shopee versus Off-Shopee, the percentage of escalated Off-Shopee is about 20% already as a total as balance On-Shopee and Off-Shopee, which is a significant milestone for us. This proves that we are not only be able to drive our expeditor in general lending in the Shopee ecosystem, but also we successfully drive this in the Off-Shopee ecosystem. And in fact, we see higher growth in the Off-Shopee ecosystem versus the On-Shopee partner businesses.

The key factor driving the growth, again, the 3 elements. One is within our current user base we still see a possibility to drive more credit adoption. And this will come with more product rollouts to this group of users and better credit assessment as we accumulate more data over time. and also deeper integration with shopping and expanding of our non-shop scenarios for this group of users. I think essentially even within the same user base, we see a huge room for us to deepen the credit penetration. The second 1 is essentially expand the the new scenarios beyond what we have right now, where the user can spend the credit limit on. This including, for example, we partnered with more online merchants who can accept accelerator partner with more merchants off-line, so they can accept [indiscernible] as well.

Even for our in some of the markets where credit card is big slightly bigger, we roll out a debit card system, leveraging on credit limit so they can use our affiliated credit through -- as well. So all this will expand the pool addressable market pool for our user base. I think the third thing is for us to continue to expand to new user segment, I think that's very important for us as well. I believe I was mentioning the opening to that as we started more from a subprime market segment when we estimated more risk data and also better our risk models -- and we are able to expand to a more prime user segment with 5 different products in various markets.

This user might have a slightly lower ROA, but this gives us a bigger outstanding pull for us. I think all this will drive the growth of our lending businesses in the coming years across our markets.

This concludes our Q&A session. I would now like to turn the conference back over to Ms. Rebecca Lee for any closing remarks. .

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

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

Good morning, and good evening to all, and welcome to the Sea Limited's Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions]

And finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Mr. Elson Choi to begin the conference. Please go ahead, sir.

Hello, everyone, and welcome to Sea's 2025 Fourth Quarter and Full Year Earnings Conference Call. I'm Elson from Sea's Investor Relations team. On this call, we may make forward-looking statements, which are inherently subject to risks and uncertainties 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 disclosure. For the 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 Sea's Chairman and Chief Executive Officer, Forrest Li; President, Chris Feng; and Chief Financial Officer, Tony Hou. Our management will share strategy and business updates, operating highlights and financial performance for the fourth quarter and full year of 2025. This will be followed by a Q&A session in which we welcome any questions you have.

With that, let me turn the call over to Forrest.

Hello, everyone, and thank you for joining today's call. 2025 has been a great year for Sea. We generated a record $23 billion in revenue, representing 36% year-on-year growth, an acceleration from 2024. At the same time, we improved our bottom line profit. Our full year net income reached $1.6 billion and adjusted EBITDA reached $3.4 billion, representing a 250% and 75% year-on-year increase, respectively. .

Overall business is doing well in 2025, exceeding our initial growth expectations. This broad-based robust growth is healthy and sustainable underpinned by the growing scale of users that we serve. In 2025, Shopee served around 400 million active buyers and 20 million sellers achieving $127 billion in GMV. Money gained over 20 million unique first-time borrowers and grew its loan book beyond $9 billion, while maintaining stable rate. And Garena connected with over 100 million players on average every day throughout the year, generating almost $3 billion in bookings.

We were successfully in 2025 because we chose the right set of strategies, and we execute them as well. 2026 will be a continuation of this approach. Our strategies will be consistent and execution remains key. We will double down on operational excellence and work towards delivering another year of strong growth and healthy profit.

With that, let me take you through each business performance. First, starting with Shopee, Shopee achieved another record second quarter with new highs in GMV, gross order orders and revenue. Our full year GMV grew 27% year-on-year, alongside significant profit improvement. We generated a full year adjusted EBITDA of over $88 million in 2025.

Our strong GMV growth was driven by tangible improvements we made for both buyers and salaries. We made product discovery easier, broadened our assortment of operates at competitive prices and widened access to fast, reliable shipping. We also improved our monetization further in the fourth quarter. increased by more than 20% and their average ad expense increased by more than 45% year-on-year.

As a result, net revenue grew over 70% and a take rate increased by more than 80 basis points year-on-year. The strong set of 2025 results is a validation of the effectiveness of our strategic choices for Shopee. We have shown our ability to enhance monetization as demonstrated by our consistently improving take rate over the past 2 years.

For the near term, we choose to prioritize growth while upholding financial discipline. For 2026, we aim to grow Shopee and GMV by about 25% year-on-year, with its full year adjusted EBITDA no lower than 2025 in absolute dollars. We believe this is the right strategy to optimize Shopee's long-term profitability.

Let me highlight a few areas where we are investing to further enhance our scale and market leadership. This includes our continued efforts into logistics, Shopee VIP membership program and expansion of our content ecosystem. The objective is clear. We want to serve more users and engage them better. In 2025, monthly active buyers and average monthly purchase frequency increased by 15% and 10%, respectively compared to a year ago.

In 2026, we will remain focused on executing these priorities as well. It will benefit us with deeper structural mode that can further differentiate Shopee from its peers. First, logistics. Our logistics capabilities have become an increasingly important differentiator for Shopee. SPX Express now processes on average, over 30 million every day, making it one of the largest e-commerce logistics solution provider in our market.

In 2025, we improved speed and cost efficiency across our markets, while customer mining delivery options for different user needs in those urban areas, with scaled instant and same-day delivery for buyers who value speed and convenience. We expanded instant delivery into additional use cases, including partnering with local supermarket and supplier to deliver fresh growth rate in Thailand in as little as 1 hour.

Our faster delivery services reached a double-digit share of order volume in greater metropolitan areas such as Bangkok and by the end of 2025. Buyers using instant and same-day delivery also spend around 15% more on average after adoption. At the same time, we scaled economical shipping to serve buyers seeking affordability. Indonesia, orders using economical shipping more than doubled year-on-year in the fourth quarter.

With our delivery capability well scaled, we started to roll out fulfillment service in various markets across 2025. We are seeing encouraging adoption trends from both buyers and sellers with double-digit order penetration in some markets. In 2026, we plan to expand fulfillment further across all our markets and aim to double our fulfillment order penetration by the end of the year.

Second, the Shopee VIP membership program. In 2025, we introduced this program to deepen engagement among our most active buyers. The trade program is subscribers more generous free shipping entitlements, daily vouchers and exclusive discounts.

We have now rolled out Shopee VIP to all our Asian market. Total subscribers surpassed 7 million at the end of the year, more than double the number from a quarter ago. Across every market where we had launched, the program has consistently produced double-digit spending uplift by members after they join. In initial, VIP members have been spending about 30% to 40% more than before joining. In some markets, VIP members already contributed more than 15% of total GMV in the first quarter. Building our Shopee VIP success in Asia, we plan to launch it in Brazil in the coming months.

Third, our content ecosystem, restressing our content and affiliate ecosystem in 2025, making discovery more engaging and supporting higher purchase conversion. We saw strong momentum in our partnership with YouTube with orders driven by YouTube content more than tripling in the fourth quarter year-on-year.

Our collaboration with Meta has also done well since its launch in October. By the end of the year, more than 3 million affiliates has linked their Shopee and Facebook accounts. This partnership has extended our ecosystem coverage across multiple channels to the benefit of both our buyers and sellers.

I would also like to highlight our strong achievement in Taiwan and Brazil. In Thailand, GMV growth accelerated to double digits in 2025. Our wide product assortment, highly competitive pricing and depreciated logistics have made us the clear e-commerce leader there.

In particular, our large-scale network of Shopee collection points including automatic blocker stores has reinforced our popularity in Taiwan. It addresses Taiwanese desire for convenience while lowering our cost to service, allowing us to offer free shipping at a much lower minimum spend. By the end of the year, our network has grown to over 2,800 locations.

This last mile delivery model has contributed to broader user adoption and stronger repurchase behavior while operating a structural mode that is difficult for any peer to replicate at scale. We still see much headroom to strengthen our market leadership and improve e-commerce penetration in Taiwan. Brazil was our fastest-growing market in 2025, delivering robust GMV growth and market share gain while remaining profitable.

Mass market penetration improved, thanks to our ability to offer free shipping at the lowest cost structure in the market. Upmarket penetration also improved as our fast reliable delivery made us more attractive in higher-value categories. In the fourth quarter, final rating time improved by around 1.5 days year-on-year.

Over the same period, we onboarded more than 300 new brands to Shopee malls and Shopee mall GMV more than doubled year-on-year. With these efforts, newer buyer cohorts are showing higher average spend levels.

In 2026, we will accelerate the rollout of our fulfillment capability in Brazil. This will enable us to attract and serve even more sellers, especially in higher value categories and keep improving our average basket size.

Shopee delivered an exceptional 2025, setting new growth record every quarter. This has proven the effectiveness of our strategic choices. We have also validated the efforts we made across the year to constantly improve our execution capabilities.

In 2026, we will remain consistent on both our strategies and our focus on high-quality execution. We believe our strong growth momentum and healthy profitability will continue into the year ahead. Next, moving into Money.

We are very proud of the progress Money made in both growth and profit while maintaining a healthy risk profile. In 2025, Money's annual revenue reached $3.8 billion, representing 60% year-on-year growth. Adjusted EBITDA exceeded $1 billion, representing 23% year-on-year growth. Credit business remains our primary driver of growth and profit.

In 2025, we grew our credit business in 3 ways: acquiring more new users deepening engagement with existing users and expanding credit use cases. First, we acquired many more new users by shifting from a wide list based approach to a broader applied approach. We progressively rolled this out across our markets for both pay later and the personnel cash flow.

New user cohorts scale well with generally positive unique economics. In the fourth quarter, we added 5.8 million unique first-time borrowers. Our active credit users crossed 37 million at the end of the quarter, up more than 40% year-on-year.

Second, we deepened our engagement with existing credit users for borrowers with longer credit track record. We offer set to higher loan limits and longer tenure to target more prime users, we introduced depreciated pricing and more product features such as reloads. By the end of the fourth quarter, average loan outstanding per user was around $240, a 27% increase year-on-year.

Third, we vented credit use cases beyond Shoppe into more consumer expense scenarios, letting penetrate a much larger and addressable market. Off SPayLater has evolved from a nascent operate into a meaningful contributor to our overall loan portfolio.

By the end of 2025, SPayLater later loans grew over 300% year-on-year, accounting for over 15% of our total pay later. In Malaysia, close to 30% of SPayLater usage was already off shopping. Our success with off SPayLater has been driven by the close attention we pay to user experience. We took great efforts to ensure that SPayLater would be activated in second and used seamlessly for in-store purchases.

We integrated SPayLater with national QR payment systems across key markets making it much easier for consumers to use in day-to-day purchases. We also expanded the use of SPayLater into higher ticket off-line categories, such as electronics and 2-wheelers. We are encouraged by the early traction we are seeing with off SPayLater and see sufficient headroom to expand its use cases.

Our credit business expansion in 2025 was made possible by improvement in our underwriting capabilities. This improvement cat on our rich ecosystem data and advancements in AI. Over the year, we made good progress training our risk model to better understand and map how user behavior evolves over time.

We are better able to accept the video repayment capacity alongside the evolving market risk and dynamically adjusted credit limits. Enhancing our model's position and the performance enabled us to scale rapidly in 2005, while still maintaining a table risk profile.

Our 90-day NPL ratio held steady at 1.1% as of the end of the fourth quarter. Looking ahead, I'm incredibly excited about many growth potential. Many of our initiatives are still in early stage with huge opportunities we have yet to capture. We are also making good progress growing our products and services beyond credit from digital banking to insurance and more.

We believe Money will be a significant long-term profit contributor for us. Next, turning to Garena. 2025 was a blockbuster year for Garena. grew 37% year-on-year, and adjusted EBITDA grew 38% year-on-year. Free Fire expands its reach and scale globally, and we saw solid momentum across our broader portfolio from Garena sellers to new titles such as Delta Force and EA Sports FC mobile.

Free Fire journey over the last 8 years has been truly special. It is remarkable for a franchise of its vintage to still be growing so far. Free Fire has now achieved 2 consecutive years of bookings growth exceeding 30% with 2025 bookings nearly double the level reported in 2023. Even at massive scale, average daily active users in 2025 continued to grow year-on-year.

Free Fire success is driven by our ability to consistently deliver high-impact experiences that bring communities together. 2025 was a defining year in this regard, showcasing our excellent execution across the full spectrum of major in-day and real-world initiatives.

We delivered a content pack year. In Q1, we launched Naruto Shippuden Chapter 1. In Q2, we released our eighth anniversary map, Zalora and in Q3, we launched the quick game collaboration and the Naruto Shippuden Chapter 2. This blockbuster year was the product of more than 2 years of intense preparation, collaboration and game development.

We started working on the Naruto Shippuden project in 2023 when the global game industry was struggling with a mix headwind. We knew this project required a long development time line. In that difficult time, the easier part would have been to focus on smaller, shorter-term rates, but we were convinced that this was the right thing to do and remain committed to the long-term vision we have for the project.

Our conviction patience and hard work have been hugely rewarded with the collaboration resounding success. Garena's culture of always prioritizing what is back for our players, even through hard times has sustained Free Fire popularity and relevance, making it an average growing game. 2025 was also a big year for our esports system. The Free Fire serious global finals held in Jakarta in November marks a historical moment for the franchise. More than 600,000 players competed worldwide across Free Fire qualified regional leads and global finance. This earns Free Fire title for the largest mobile team-based esport tournament. Over the past 8 years, we have built Free Fire into more than just a day. It is not a global franchise lending, gameplay, social engagement and real world. This approach has deepened the game's emotional connections with players and continues to fill its organic growth.

We are already laying the groundwork for Free Fire next phase, including preparation for its landmark trends and growth rates in 2027. Beyond Free Fire, eSports Mobile has delivered a strong earnings performance. Since the launch in October, it has become the most downloaded mobile gaming VNAND according to Sensor Tower. We hosted 2025, a flagship eSports and fan event in cities. The event was incredibly popular reaching 18 million viewers online.

To build excitement for the event, we brought in global football icon, Ricardo and play with local footballers and influencers in a friendly match. Our success with this game demonstrates our ability to localize the global franchise through the engagement with fan communities on the ground. We look forward to further strengthening our long-standing partnership with EA. We are very proud of Garena's sustained success across, our long-standing published games and the exciting new titles we have added to our portfolio. Garena is entering 2026 with strong momentum, we'll keep delivering high-quality content and experiences to our global gaming community.

As we enter 2026, we see exciting opportunities across our businesses and the market, our excellent performance in 2025 has strengthened our conviction in our operational strategy. We will double down on executing the strategies with excellence in the year ahead. As always, we greatly appreciate your trust and the support along the way. We look forward to delivering another strong year. With that, I invite Tony to discuss our financials.

Thank you, Forrest, and thanks to everyone for joining the call. For Sea overall, total GAAP revenue increased 38% year-on-year to $6.9 billion in the fourth quarter of 2025 and 36% year-on-year to $22.9 billion for the full year of 2025. This was primarily driven by growth in Shopee and Money. Our total adjusted EBITDA was up by 33% year-on-year to $787 million in the fourth quarter of 2025 and up by 75% year-on-year to $3.4 billion for the full year of 2025.

On Shopee, gross orders increased 30% year-on-year to $4 billion in the fourth quarter of 2025 and GMV increased by 29% year-on-year to $36.7 billion in the fourth quarter of 2025. Our fourth quarter GAAP revenue of $5 billion included GAAP marketplace revenue of $4.3 billion, up 36% year-on-year and GAAP product revenue of $0.6 billion.

Within that marketplace revenue, core markets revenue mainly consisting of transactional base fees and advertising revenues was $3.6 billion, up 50% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistics services was $0.7 billion. For the full year of 2025, GAAP revenue of $17 billion included a GAAP marketplace revenue of $15 billion, up 34% year-on-year and capped product revenue of $2 billion.

Shopee adjusted EBITDA was up by 33% year-on-year to $202 million in the fourth quarter of 2025. Full year adjusted EBITDA was $881 million for 2025 compared to a full year adjusted EBITDA of $156 million for 2024. The Money GAAP revenue was up by 54% year-on-year to $1.1 billion in the fourth quarter and up by 60% year-on-year to $3.8 billion for full year of 2025. Adjusted EBITDA was up by 25% year-on-year to $263 million in the fourth quarter of 2025 and up by 43% year-on-year to $1 billion for the full year of 2025.

As of the end of December, our consumer and SME loans principal outstanding reached $9.2 billion, up 80% year-on-year. This consists of $8.2 billion on-book and $1 billion off book loans principal outstanding. Nonperforming loans past due by more than 90 days as a percentage of total consumer and SME loans was 1.1% at the end of the quarter.

Garena bookings grew 24% year-on-year to $672 million in the fourth quarter and grew 37% year-on-year to $2.9 billion for the full year of 2025. GAAP revenue was up by 35% year-on-year to $701 million in the fourth quarter and up by 26% year-on-year to $2.4 billion for the full year of 2025. The growth was primarily due to the increase in our active user base as well as the deepened paying user penetration.

Adjusted EBITDA was up by 26% year-on-year to $364 million in the fourth quarter and up by 38% year-on-year to $1.7 billion for the full year of 2025. Returning to our consolidated numbers. We recognized a net nonoperating income of $62 million in the fourth quarter of 2025 compared to a net nonoperating income of $28 million in the fourth quarter of 2024.

For the full year of 2025, nonoperating income was $296 million compared to nonoperating income of $117 million for the full year of 2024. We had a net income tax expense of $210 million for the fourth quarter of 2025 compared to a net income tax expense of $89 million in the fourth quarter of 2024. For the full year, our net income tax expense was $651 million compared to $321 million for the full year of 2024.

As a result, net income was up by 73% year-on-year to $411 million in the fourth quarter of 2025. For the full year, net income was $1.6 billion as compared to net income of $448 million for the full year of 2024.

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

[Operator Instructions]

Your first question comes from the line of Pang Vit from Goldman Sachs.

Two questions from me. The first question is on Shopee. Can you provide more details on how you plan to achieve the target growth in 2026, while maintain at least flat year-on-year absolute EBITDA? What assumption specific are you making regarding the competitive landscape? And given the trajectory of lower year-on-year margin potentially, what are the key investment areas? And how long should we expect the investment to last? That's question number one. .

Question number two, this will be on Money. The loan book grew very strongly, closing the year more than 80% year-on-year. Can you elaborate on the key drivers of the strong performance? Was this primarily driven by new products, new market pricing or stronger demand? Or how should we think particularly about growth in this year, 2026? Like wise, how should we think about the EBITDA margin trend going forward as well for the segment? .

If we start from the Shopee side, the first question. I think the -- as Forrest mentioned in the opening, there are a few areas we are investing for growth. If you start with South Asia, essentially, there are kind of 2 core anime. The first anime is to increase the share of wallet of the core users. Second is to increase the buyer base.

If you start with the first one, the thing we are doing is actually kind of similar to what we did before, but further enhanced in 2026 is to have better user experience through our logistics. For example, the instant delivery same day you have a better experience. On top of the general improvement of our delivering qualities. In South Asia, if you try our services, you will see a general faster deliveries and better reliabilities over the year. We're going to continue to do that.

The second part is to have a bigger fulfillment network, and I think this will both reducing the speed of user will receive items because we can move the items closer to the users before the user actually order the items. I think in South Asia, most of the countries have set concentrated in the capital region. So if you after capital regions having a warehouse closer to your area is a big speed improvement, but not only the speed but also the reliabilities of the services and also helping the seller to offload many of their work essentially to make it easier for seller to sell our platforms.

The other area is to increase the wallet share in the VIP program. Not only sort of like offering better service for our own -- through our own platforms, we are working with many different external partners to offer benefit to the VIP user as well. As you probably can see that we've worked with OpenAI and ChatGPT, we are also working with many local partners in different countries, and there are many global and local partners are pending in the process. The -- again, this is on top of the -- many other things we are doing, for example, the price initiatives to make sure that our platform is always price competitive. We also continued the effort on the content side. Our content share of businesses has been growing over the years, more than 20% already.

And I think that trend will still -- will continue, not only for our own content, but we work with external partners like YouTube, like Facebook apps, and we are discussing more collaboration for the external content provider as well for this. Again, this is a broader segment of increasing the wallet share for our core users. Another part of the effort, as I said earlier, to increase the buyer base.

I think the -- if you look at where we are right now versus, let's say, a year ago, one of the difference you will see that our gross unit economics has been improved meaningfully with the high take rate through the ad effort and also part of the commission effort. We have -- there's actually a higher take rate on the top line, but also reduce our cost to serve essentially for the logistics plus payment, essentially this the raw cost to serve with the better gross margins, there are more and more users we can serve in a profitable way. So this enable us to be able to essentially serve a larger group of users. And what we are doing in 2026 is we choose users to convert them to our platforms. And hence, enhance the overall the MPUs and MUs for our platforms. So that's kind of a broader theme of what we are doing in South Asia. In Brazil and Taiwan, many things are similar, but I just want to highlight a few things that specific to the market as well. In Brazil, we have been operating with a much efficient logistics network compared to what's available to our -- to the other players in the market with much lower cost.

And we are able to run the businesses probably with sort of much lower basket size. With this, we would like to essentially on top of this to serve the high-end customers well over time in higher basket size categories. In order to do that, there are essentially 3 things that's important. One is to increase the speed of deliveries. I think as Forrest mentioned in the opening, we have reduced the shipping speed over time meaningfully -- like if you compare Q4 this year versus Q4 the year before, I'm sorry, I made 2025 versus 2024, you will see 1 to 2 days difference on the timing in Brazil. I think that's very important to make sure that the user gets the item faster with a lower cost without impacting the cost.

That's very important. Second one is the fulfillment network that we are doing in Brazil. The -- we have been ramping this in the past quarter, but 2026 is the really time that we're going to grow that's much larger. I think we spent quite a few months to get all the kind of detail right, the system right, get the location right, get the projects right. I think it's a time to actually to grow this much faster.

The third one is to make sure we have all the right sellers for sorting particular categories, like, for example, auto electronics, et cetera, but also for the most other branded sellers coming to our platform. I think with all the 3 elements coming in place, I think this will enable us to reach out to a new segment that we are not able to serve in the market, right? I think in Taiwan, we have a kind of quite special network we built for our deliveries. I think the -- in order for us to capitalize on that. We also start building the fulfillment part as well to have an integrated operation. So not only sort of just it's integrated operation with our local networks, so we are able to serve the users in a much lower cost end-to-end, but also faster speed compared to what the experience before with the other networks in the market. Yes. So on all these kind of the things we are doing. And many of this has an investment cycle as well. If you look at the fulfillment network, there will be a period of time, we'll build it up, but there's a investment cycle come with it rather than that is ongoing perpetual investment. For example, if you look at the faster deliveries we're building. I think that is a period of time that we will scale the delivery fleet, et cetera. It's a separate fleet from the typical SPX services. For example, if you look at the VIP program, there is a pure time that we will kind of educate the market, but -- and also attract our partners as we get everything in place, I think the cost structure will be a lot better. I think it's been proven in many other markets, as you probably been aware.

If you look at the sort of the overall profitability margins, our Q4 EBITDA margin is around 0.55, as you can see. Compared to the year before, 2024, we are actually improving on the margins. If you look at over the years, in the early part of the year in 2025, we guided the market to grow around 20% for our top line. Over the year, we actually realized that we are able to grow the businesses much faster. We end up with much higher than that. If you look at the year-to-year growth, if you look at Q4 growth, we grow much larger, much higher than 20%. I think it's actually over the year, we realized that there are areas we are able to drive the market to grow. And we also learned that there are different levers that we can pull to drive the market growth. And 2026 essentially extension from where we are in Q4 2025. And if you look at sort of like Q4 2025, if you look at the end of the year 2026, I do believe they're able to expand the profitabilities at the margin there as well. And this trend can continue over the years. And I think we talked about a 2% to 3% margin for e-commerce businesses over time. I think the building is still clearly there. And we will demonstrate it to the market over the years. And the -- at the same time, we also believe that the market potential is probably larger than kind of many projections and the 2026, as we said earlier, we are able to grow around 25% and of course, the -- we will observe how the market behaves over the years and over the quarters. I think the core thing for us is, I think the businesses, I think, is in a shape that we are very confident that there are things we can do to drive the business growth. And the things are within our control and the thing we are doing has a clear investment cycles that we can drive over time.

Regarding your question on the competitive landscape, I think what we observed is relatively stable competitive landscape across most of the markets. Yes, I think that we didn't observe anything very different from what we see from last quarter. I think that's a sort of a question to the e-commerce side. On the Money businesses, see, there are multiple drivers driving the growth. On the broader scales, we see that there is a different phase of our businesses that we roll out in different markets. We also have different products we get in different markets in different places. For example, the early market that we start -- our financial services businesses was Indonesia. So clearly, Indonesia was the first country that grew much faster than others. Then over time, we start kind of like the services in a country like Taiwan and Malaysia, et cetera. So these kind of countries will catch on the growth and the initial phase of this new market clearly will grow faster than the market has been there for quite a period of time. Another come forward would be like Brazil. If you look at -- essentially is actually our latest market when we launch many of our products. Brazil also in a pretty high-growth space as well. The other drivers on the product side as well. In most of the countries, we started with SPayLater, which is our consumption loans. So that's the first growth driver. And then later, we rolled out the cash flow -- the personal cash loans. We also wrote the offshore piece and then the cash loan and Shopee platform loans will be the growth driver. So if you look at the growth, the on Shopee side, we still see more penetration possible on Shopee. And even within escalator, we have differentiated products for different users, especially for the more higher income segment, we offer a differentiated product with longer tenure, slightly lower interest rate, et cetera, to those segments. So we still see opportunity to grow this segment and for the off platform lending, I think we shared quite some in the opening as well. For example, in some countries like in Malaysia, we see the off SPayLater has been 30% of the overall popular already. And I think all these are driving the growth for our loan book. Regarding the margins, I think the margin influenced quite a lot by the country mix, product mix and also whether we see a good opportunity to acquire users. I think it might fluctuate a little bit quarter-to-quarter. But the fundamental of this is how is our risk management capabilities that we see. We have seen very stable risk. If you look at a particular product for a particular market, the risk is very stable for us. You can see this from our NPL number as well. And we track this very closely internally to make sure that we don't sort of like grow the loan book because we want to grow the loan book on the top line. We want to do it very prudently.

At the same time, we actually upgrade our risk management models over the years, especially with many of the new AI technology. We're experimenting with the new AI -- new risk models with transform as well to do a sort of a long sequence data training fitting to our model to to utilize many of the e-commerce data that we are not able to use in the traditional risk modeling, and it has been showing us very good performance. And so many of this will help us to manage our risks and to reach out to the user base we are not able to serve before so that we can grow the loan books over time.

Your next question comes from the line of Piyush Choudhary of HSBC.

First question is on Shopee. You have elaborated on various investment buckets. Could you also elaborate on how long these investment cycle last in the context of how we should think about margins for 2027? And what are the likely deliverable from your partnership with Google to deepen AI-powered solutions for Shopee? And second question is on Garena. Could you talk about the outlook for the booking growth in 2026 pipeline for any IP collaborations which you can share? .

For the investment cycle, as I shared earlier, I think for different initiatives, there are different investment cycles and also for different markets in the different investment cycles. So it's a little bit sort of like tricky to generalize it, I guess from a top-down perspective. But as we guided in the openings that we do want to make sure, number one, that the total profitability in the absolute number of 2026, is better than 2025.

And also, if you look at the profitability levels, I do believe that if you look at sort of like end of the year or over the years, I think it will not be worse than Q4 2025 and it should be able to grow over years. And if you look at -- we're not providing guidance, let's say, for FY 2027 yet. But as a medium-term to long-term trend, I think 2% to 3% EBITDA margin, I think it's well achievable based on what we see so far. It's in ways with choices on how much we want to draw on the margins versus the growth levers that we have in our hands. From what we see, it's -- we don't have any concern on that.

In terms of the partnership with Google, we are still in the process of developing the product. I think the -- it shouldn't take too long, I believe. I think when we have the product ready, I think we'll be able to share with everyone. It's largely sort of working with -- we've been working with Google for many years on Google Shopping and Google Ads and many other things like YouTube as well. So this extension of our partnerships.

Regarding the outlook for Garena, at this moment, we still see the double-digit growth for Garena for 2026. And in terms of the collaboration pipeline as we shared, we are super excited and motivated by seeing the success of the collaboration with IP such as Naruto. Actually, this year, we're going to extend that IP collaboration. So this probably -- the delivery will be around Q3, so based on our current time line. And we are also actively working with other potential like IP collaboration. Meanwhile, this year is a big football year so for FIFA World Cup. So -- and we realized actually the global football community has a very, very high overlap our global gamer community. So during the -- like the FIFA World Cup time, so we're going to have a lot of like football-related promotion as well.

Next question comes from the line of Alicia Yap of Citi.

Two questions here. Number one, could management provide some insights into the retention and also the renewal rates for your VIP member subscription program? And then furthermore, if you can give us how does the VIP members influence the different purchasing frequencies and also the preferred product category? And also, are there any difference between behavior in the customer profile across the different countries? And how does this affect your strategy?

And then second question is on AI. So wondered to ask given like can management share with us on your investment priority given how are you prioritizing your investment given -- so how are you prioritizing investment between the e-commerce impact and AI amid the latest competitive environment and also the importance of the AI initiatives. So if management can share how leveraging your synergies between your 3 core business to strengthen your competitive advantage and also to enhance your ecosystem value?

For the Shopee VIP program, it has been growing quite a lot over the past few months. In some countries, it's been more than 15% of our total GMV for the VIP members. I think we do believe that this will grow further to double or triple from where we are right now. The retention has been pretty good, actually. The renewal rate, it's one of the core challenges historically for a similar program in region is a payment success rate when sort of when they roll from sort of 1 month of to another, the many people drop off simply because there's no credit card available for users in our region versus if you look at the more credit card market. .

I think we solved this by working closely between Shopee and Money to enable the smooth payment process for our VIP program. And as a result, our kind of the subscription -- restructuring rate has grown from 40% to 70% of the Indonesia over the past few quarters. This is a big achievement for us in terms of how we can retain the VIP members as an ongoing basis. And for most of the VIP members, if you look at the average purchasing, we do see that much higher frequent purchase and sometimes with the higher basket as well. I think overall, if you look at the general number, the VIP members spend 30% to 40% more than the average. For different markets, actually, we see quite similar behaviors in different markets. I think probably the difference, I guess, in the market is probably the offerings because there are different preferences in different markets in terms of user behaviors and what people care about. So we actually tailor the VIP offering quite customized tailor for each of the local markets. I think that's probably more the difference than the sort of the other behaviors.

On the investment front, so if you look at our different businesses, our Money businesses is a very profitable business. And for most of the new user growth of most of the new initiatives, it comes with a quite positive customer life cycle value. So it's kind of like -- so in a way, every initiative has a positive ROI. I think if you look at the e-commerce side, we do spend quite a lot of effort on the AI. I think you mentioned about AI investment there. For every -- for the investment on the e-commerce for AI, we also look at the positive return of investment across the initiatives. For example, if you look at the -- one of the areas we spend on AI is our search recommendation and also ad systems. The uplift on our ad take rate is a consequence of many of our AI efforts. For example, how do we actually expand the description for our products, we can understand the product better. For example, how can we expand the queries from the users. We understand user intention better. Recently, we also rolled out a multi-model search in our platform as well. So users can search a picture plus a long description and we are able to serve that just similar to what Gemini which will do. I think all those AI investment has a clear ally. We also spent quite a lot of effort using AI to help our sellers. For example, if you go to many of our countries, you can talk to the sellers with the help of AI already.

So we built AI chatbot for our sellers, our seller can customize it for their own purposes. This will help the to reduce the manpower and also make it not only reduce cost but also have a better upsells for the buyers, and we also have tools for the seller to create videos and feature descriptions for their product, et cetera. All those typically come with fairly positive return on investments for our ecosystem. For the synergy across our businesses early, there is a lot of synergy between e-commerce and actual financial service businesses. The financial services are essentially leveraging a lot of data -- a lot of user behaviors from Shopee to be able to risk assess the users, we still believe, as I said earlier on the previous question, we still believe there's a sizable room for the Money to penetrate the Shopee user base there. Not only for credit, but also for our banking businesses, insurance businesses, our payment business, et cetera. Our payment -- our Money business also work with our work in site to help the game on the payment as well that is a collaboration with gaming business from Shopee as well in terms of the merchandising in terms of the user acquisition side. So there are different type of collaboration on our businesses.

Your next question comes from the line of Divya Gangahar of the Morgan Stanley.

My first question is on the Brazil space. So could you comment if you expect GMV growth in Brazil to accelerate this year given all that we are doing on the fulfillment capability? And what kind of impact would that have on our AOVs. Are the AOVs still significantly lower or 1/3 of the market leader? And what kind of gap do you expect to be able to cover with this fulfillment uplift? Could you also comment on what the penetration levels for Shopee Pay Later in Brazil are and should that also see a significant uplift this year? So that's my first question on Brazil. And my second question is on the content ecosystem that you alluded to. Could you comment on where do you see the e-commerce content ecosystem plateauing in ASEAN specifically? And what are the unit economics now versus shelf e-commerce for us? And how is our market share trending in this?

For Brazil, we come with a pretty high growth rate in 2025, we do believe that growth will continue in 2026. We don't have a guidance for a particular country on the growth rate. But in general, we will see pretty good growth in the market. We also believe that we will outgrow the overall market in Brazil. On the AOVs, we do believe that AOV will, over time, grow. The gap with many, I think it will still have, but I think we will narrow down the gap over time. For the escalated penetration price, it's still in a very early stage, honestly. I think we grew quite a lot in Brazil. And the penetration in Brazil is still -- essentially, we started Brazil a lot later in other countries and the penetration level in Brazil is still similar to the early time of what we observed in our early markets. So we believe the trend will continue in terms of the penetration of SPL SPayLater in Brazil in 2026, similar to what we observed in other Asian markets. For the content ecosystem, we don't think it's plateauing yet for our platform. I wouldn't comment on other platforms, but will platform, we do believe that further room to grow in the coming quarters. The economy has been improving over years. I mean, sometimes there's a slight fluctuation from to most, but general direction is maybe economic still improving over the time. I think the gap between the content ecosystem and the non-content economics, it will be narrow over time, and it will not be too much different in future.

This concludes our question-and-answer session. I would like to turn the conference back to Mr. Elson Choi for any closing remarks.

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

Thank you for attending today's call. You may now disconnect. Goodbye.

Good morning and good evening to all, and welcome to the Sea Limited Third Quarter 2025 Results Conference Call. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you.

I would now like to welcome Ms. [ Rebecca Lee ] to begin the conference. Please go ahead.

Thank you. Hello, everyone, and welcome to Sea's 2025 Third Quarter Earnings Conference Call. I am Rebecca from Sea'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 a 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, Sea's Chairman and Chief Executive Officer; Forrest Li; President, Chris Feng; and Chief Financial Officer, Tony Hou. Our management will share our strategy and business updates, operating highlights and financial performance for the third quarter of 2025. This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to Forrest.

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 a total revenue of $6 billion and adjusted EBITDA of $874 million, representing 38% and a 68% year-on-year growth, respectively. Shopee's GMV grew by over 28% year-on-year. Monee's loan book expanded 70% year-on-year while maintaining a stable risk profile, and Garena delivered its best quarter since 2021, with quarterly bookings up over 50% year-on-year.

Our focus remains the same, continuing to deliver high and profitable growth across all 3 of our businesses. With e-commerce and digital finance penetration in our markets 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 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 a 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 rates increased both year-on-year and quarter-on-quarter.

Ads were a big contributor, our efforts to make ad services both simpler and smarter, broader adoption and higher ad spent by our sellers. Ads revenue increased over 70% and ad take rate rose by more than 80 basis points year-on-year. The number of sellers using our ad product increased by more than 25%, and their average ad spend increased by over 40% year-on-year. Our monetization gains, strong growth momentum and healthy balance sheet have positioned us well to capture even more growth opportunities.

Our 3 operational priorities: Enhancing price competitiveness; improving service quality; and strengthening our content ecosystem has proven to be a winning formular and 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 [ XPI experience ] in 2018 while we recognize that reliable and cost-effective every 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, plan, boat, motor bank and more. We delivered well in dense, congested at high right cities. We also delivered well in rural areas where we need to cross river, navigate right field and locate homes without formal addresses for postal call.

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. This 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 willingness to pay a premium for it. So we rolled out same day and instant delivery with delivery times as fast as under 2 hours. The response was excellent. Orders 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 saw a preference for economical delivery. So we came up with a delivery solution that reduced the cost per order by 20% compared to our standard delivery allowing rural buyers to enjoy free shipping with much lower minimum spend. This boosted Shopee's popularity among rural buyers, orders deliver outside sector a increased by more than 45% year-on-year in the third quarter.

In Taiwan, we noticed a very different customer demand. Many buyers prefer self pickup options. So we expanded our automated long-term store network to over 2,500 locations in less than 3 years, making us the only e-commerce player in Taiwan with a long-term network at such scale. Today, it is a key logistics channel, accounting for more than 70% of all our deliveries in Taiwan. This move has paid off in more than one way. The [indiscernible] run at over 30% lower cost per order than traditional pickup location. On top of that, the larger locations double up as 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 costs.

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 built [ SPX Express ] into a clear leader in scale coverage and cost in our Asia market. Our deep local insights have enabled us to customize ground strategies to create a more efficient and effective solution in every market reinforcing our cost advantage.

Our logistics capability underpins the strong growth we have seen from Shopee this year, playing a big role in making us the platform of choice for both buyer and the seller. With our delivery capability 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 as 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, I have shared updates on initiatives such as intelligent demand forecasting, where we preship commonly ordered product closer to where we anticipate better 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 there quickly. But we have already anticipated this demand. We can use cheaper forms of transport to preship it to the area, let us deliver it quickly and cost effectively once 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 benefit everyone. It takes the burden of packaging and the shipment of sellers. It gives 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 warehousing. 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 markets and a tightly integrated delivery network to pair it with. After 7 years of experience with XPS Express, we have booked.

Second, we continue to find new and exciting ways to deepen user engagement. Our subscription-based shopping VIP membership program is a great example and has continued to gain strong traction. At the end of September, we have key members across Indonesia, Thailand, Vietnam surpassed $3.5 million, up more than 75% from the previous quarter. Given 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 are demonstrating higher engagement in Indonesia, these members spend around 40% more after subscribing to the program. Shopee VIP members also bought 3x more frequently and spend 5x more than non-subscribers in the third quarter, accounting for about 10% of total GMV 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, Shopee 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 a collaboration with Meta to launch new tools allowing seamless product promotion and check out between Facebook and Shopee accounts. We are expecting to see how this 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 begun to bear fruit, contributing meaningfully to our monetization gains in the third quarter. Smarter search, better recommendation and a more personalized content have made Shopee easier and more enjoyable to shop. We have also used 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, video, test description and virtual showrooms to make their product listings more opening.

These initiatives have increased 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 markets 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 product in both our Asian market and Brazil based on [indiscernible].

I would also like to highlight our progress in Brazil, where Shopee continued to deliver exceptional growth while maintaining positive adjusted EBITDA. Our GMV growth there has been outpacing the market, driven by sustained increases in monthly active buyers, purchase frequency and average basket size over the past several quarters. Our widespread assortment, highly competitive pricing and structural cost leadership are 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.

Deliveries speed improved sequentially in the third quarter with average delivery time improving by about 2 days compared to a year ago. In the Greater Sao Paulo area, when 3 parcels were delivered the next day and nearly half within 2 days. With these improvements, we are seeing more merchants leasing higher-value products and the new buyer cohorts showing higher spending patterns. In the third quarter, GMV for ShopeeMall, our premium Shopee section more than doubled year-on-year in Brazil.

In conclusion, Shopee has delivered another quarter of strong and profitable growth. With our strong performance year-to-date, we now expect Shopee full year 2025 G&A growth to be more than 25%.

Next, moving to digital financial services. Monee has delivered another very strong quarter with revenue growing by 1% and adjusted EBITDA growing more than 35% year-on-year, while our 90-day NPL ratio remained stable at 1.1%. This strong growth was broad-based driven by both user growth and product expansion across multiple markets. Our loan book spending by around $1 billion during the quarter to reach $7.9 billion at the end of September, solidifying our position as one of the largest unsecured consumer lender 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 a 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 wide lead approach to onboarding new users. Now any Shopee user in most of our markets can apply for SPayLater credit, and we can make credit approval decisions very quickly, in many cases, almost instantly.

Moving to this old [indiscernible] approach enabled us to add more than 5 million first-time borrowers in the third quarter. New user cohort build well with generally positive 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 disbursements to new users still accounted for less than 10% of total divestment in the third quarter as we continue to accept credit quality before cross-selling more products.

We are also making our credit product on Shopee SPayLater and personal cash flow 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 SPayLater as a trusted and convenient payment method of choice for all kinds of purchases, both online and off-line.

On SPayLater has grown steadily as penetration continues to deepen across all our markets. GMV penetration now ranges from single digits in early market to over 30% in more mature ones, reflecting our discipline in scaling only with incremental disbursements up profitable. We see meaningful room to continue increasing SPayLater on Shopee penetration across our markets.

Of SPayLater 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 loan book as of the end of September. So large upside 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 off-line payments across a wide range of merchants is a key pillar of our strategy to grow our money businesses of Shopee.

In payments, it offers users a faster and more seamless experience, giving them direct success without having to go through the Shopee app. Beyond payments, it helps us unlock more use cases, positioning Shopee Pay as a one-stop platform for users' broader financial needs of shop credit, insurance, wealth management and more. The app has launched in Indonesia, Thailand, Vietnam and Malaysia and is showing strong traction. More than 20% of our Shopee Pay monthly transaction users are using the stand-alone app.

Personnel cash loans also grew strongly this quarter. In Indonesia, we have been offering higher limits and longer tenures to attract more prime users who demonstrate strong repayment behavior. Loan sizes can typically range from a few hundred dollars to over $1,000, allowing us to serve users with larger financial needs. Building on this side, 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 SPayLater users. In conclusion, Monee has delivered another excellent quarter, building well while diversifying our credit portfolio across markets, users and products. Our portfolio quality and our unit economics have remained healthy, and we are standing SPayLater's reach beyond e-commerce and bending it into users' everyday financial user use cases. This will build a pathway for strong offshore growth for many years to come.

Finally, moving to digital entertainment. Garena has delivered another stellar quarter. Bookings were up 51% and adjusted EBITDA grew 48% year-on-year, making it our best quarter since 2021. [indiscernible] anchored with a strong performance with the 2 high impact campaigns, Squid Games and NARUTO SHIPPUDEN Chapter 2. The campaigns received a huge positive response accelerating our growth momentum from the previous quarter. Our Sqid Game collaboration incorporated iconic challenges from the blockbuster Netflix TV series, such as the Red Light Green Light and the Glass Bridge. The event drove strong participation with the Red Light 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 1 in the first quarter of this year. Based on gamer feedback and the performance insights, we added new fund favorite [ Linja ] characters, new attack botanics, highly sought after collectible items and the new one-on-one mode, letting players use signature abilities from the series. Chapter 2 went time to surpass Chapter 1 in both engagement and revenue. We saw an extremely high social media share rate for Chapter 2, doubled already high bar set by our anniversary event. Both Naruto chapters have achieved the highest satisfaction scores of any campaign launched over the past 2 years.

Our Naruto content was very successful because it's 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's core creative culture. First, we require every major IT partnership to be led by a team of a genuine, super fun of that IP within arena to ensure authenticity and respect for the original work. Naruto fans love how closely the gameplay mirrors small but important details from the anime. For instance, One key storyline from the original anime was about [indiscernible] returning to to the Ninja village that has been exiled from. In Chapter 1, we had built this Ninja Village into our map and introduced iconic attack skills from the main anime characters.

In Chapter 2, we introduced attack skills that was specifically from the [indiscernible] characters like fire balls, black fire and exploding birds and redesigned the map to feature a desert version of the Ninja Village. Continuing the narrative between the chapter in a way that was true to the original anime created a highly immersive experience and broad fan excitement to the next level. These detailed only super fun would care about and understand how to incorporate into game play.

Second, we take a global yet local approach, bringing global IP to our markets in highly localized way. For instance, we took advantage of the huge traction of our Naruto campaign to hold Ninja being offline event in 8 markets across Asia and Americas, attracting tens of thousands of banks. The largest of these events was a 2-day international All Star Ninja Clash [indiscernible] tournament in Bangkok with teams of 3 bar players flying in from across Asia and Latin America to compete. The Bangkok tournament with a huge success, becoming a top trending event on YouTube gaming and on social media across key markets.

In addition to such events, our teams stay closely connected to players through creative programs and fan groups, taking into a constant stream of feedback and ideas that shape game design condition. This effort builds very strong community connection and loyalty across our market. Beyond [indiscernible], we continue to expand our publishing portfolio with the launch of EA Sports FC Mobile in [indiscernible], strengthening our long-standing partnership with Electronic Arts. The game quickly became the country's most downloaded mobile gaming October based on center tower. By combining EA's world-class football franchise with Garena's 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, Garena remains on track to achieve more than 30% year-on-year growth in bookings for 2025. Our creative debt, disciplined execution and close connection with players will continue to drive Garena's growth.

In conclusion, all 3 businesses have built up the strong momentum from the first half of the year and delivered another quarter of exceptional growth. We will continue to make our digital ecosystem even more vibrant strengthening our leadership position and deliver sustainable and profitable growth to our shareholders.

With that, I invite Tony to discuss our financials.

Thank you, Forrest, and thanks to everyone for joining the call. For Sea 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, Shopee'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 a marketplace revenue of $3.8 billion, up 37% year-on-year and GAAP product revenue of $0.5 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 $0.7 million, 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. The Digital Financial Services GAAP revenue was up by 61% year-on-year to $990 million. 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 $0.9 billion of book loan per cable outstanding. Nonperforming loans past 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 was up 31% year-on-year to $653 million. 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 nonoperating income of $61 million in the third quarter of 2025 compared to a net nonoperating 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 million in the third quarter of 2024. As a result, net income was $375 million in the third quarter of 2025 as compared to a net income of $153 million in the third quarter of 2024.

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

[Operator Instructions] Your first question comes from Pang Vitt with Goldman Sachs.

Two questions from me, both on the e-commerce side. Number one, 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 will it mean for your margin trend? And how should we think about these trends carry into 2026? That's question number one.

Question number two, just to have a good understanding of the margins. So margin trend for e-commerce 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 all variable? And how long and how much should we expect this investment cycle to be?

Yes. In terms of the growth assumption of more than 25%, 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 momentum and competitive landscape, it's pretty much reflective 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 previous year versus this year, we do see a 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 for some of the investment cycle of the initiatives 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 are able to deliver the 2% to 3% EBITDA margin as we shared before, and also have an improvement year-to-year if you look at the yearly basis.

In terms of where we are investing, one of the thing is what we mentioned in the opening, further investment into the logistic capabilities and fulfillment capabilities. And beyond that, we are also deepening our buyer engagement and [indiscernible] shares through, for example, our Shopee VIP program that we shared in the opening as well. And all those efforts has been showing a pretty good result. Our buy frequency improved 12% year-on-year and average monthly active buyers increased 15% year-to-year as well, which contributes to our great growth this quarter, which is way above the guidance we gave in the of the year, which is 20%.

The -- most of these investments are less fixed per se. We take a relatively asset-light approach even coming to our logistics and [indiscernible] businesses. We don't want to lend. Most of our CapEx is just improvement of building the warehouses or sorting facilities, et cetera. For our buyer engagement and [indiscernible] share program on IP is also less fixed. Obviously, you will see a little bit of investment in the early days to get everybody understand the program and join the program. But as time goes, it should be a quite profitable program as you probably have seen in other e-commerce platforms. across the globe.

Your next question comes from Divya Kothiyal with Morgan Stanley.

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 reentry 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 have they moved in the third quarter? And also, if you could comment on Taiwan, do you foresee increasing marketing spend 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.

Yes. I think regarding the new markets, we take a very highly selective approach on any new geographic expansions. Many of the initiatives will be very early stage, testing the market in nature. The reason we look at Argentina is it's essentially a expansion of our capability that built 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 of our sellers with a minimal increased mental investment. I think the -- we will take some time to learn about the market without sort of have a heavy investment into the market at this point in time.

For Chile and Colombia, we decided 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 is still an important market for us. We will continue to explore the opportunities to serve the consumers and business well there. If you look at the absolute size in Latin America, obviously, Brazil is the largest one, where we are have a very large presence there. Argentina, as we mentioned and Colombia and Chile, a relatively smaller market and also rate more distant from Brazil. I guess that's thinking around the first question.

Regarding the market share in South Asia in quarter 3. As we shared, our growth has been above kind of the expectations we shared before. And across the region, we do believe that we are gaining market share in South Asia growing faster than the market in South Asia. For Taiwan, in particular, the cross-border to Taiwan has been, in general, a smaller part of the businesses, giving the complexity for the buyer experience on cross-border side. So we are less concerned about the cross-border players selling from overseas to Taiwan as a potential impact to our businesses.

Actually, if you look at the recent quarters, we grew very well in Taiwan. We grow double digit, which is faster than the overall market in Taiwan. So we are pretty confident that given we are the largest e-commerce platform with the largest assortment with the best pricing. And also, we have the best delivering infrastructure with a much lower shipping and fulfillment costs compared to anyone in the, market we are able to defend our market share, well, we are able to grow even faster in Taiwan with our investors a much better build than previous years.

Your next question comes from Alicia Yap with Citigroup.

Congrats on the solid results. Two questions. One is if you can elaborate a little bit more overall competitive landscape in Southeast Asia. So are there any countries that we are seeing more intense competition lately? And also any countries that where you see peers are growing faster than Shoppe? And do you anticipate the live streaming peers to start shift more of the traffic and also the purchase frequency to the shelf-based, the marketplace model in addition to the live streaming? If that is happening, what could be the potential threat to Shopee?

And then second question 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 investments that are more front-end loaded with GMV growth and my share growth to follow to later, especially for, for example, like you need to ramp up your fulfillment 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 -- I mean 2 years ago?

On the competitive landscape, what we see is relatively stable competitive landscape. 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 a general trend across the South Asia market in terms of the intensities or the behavior of the competitors.

Regarding whether the livestream peers focus more on shelf space model, I think it's not something new. I think it's something we try to do for quite a long time. It's as you probably see from China as well, et cetera. But we do see that the nature of the platform is different. I think the percentage of shelf commerce, it's relatively consistent, let's say, from what we observed. The -- also, if there are much more traffic pushing towards that, that is a potential of impacting how the overall app behavior and the user retention as well. But anyway, I think that's kind of similar behavior, you will see in China and South Asia. But we wouldn't see that new thing impacting the comparison in a meaningful way.

On the investment cycles, I think the short answer is probably not. It's probably quite different from what you see 2 years ago in terms of the investment to the content ecosystem, if you remember that. I think what we are doing now is 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 have better logistics and now we are extending logistic fulfillment network as well. It's actually in a way it's not company new, it's a capability we have been trying to build for a period of time. And now we felt it's a good time to scale it even more.

But as I shared just now, it's less CapEx-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 the overall cost to serve as ecosystem and also reduce the delivery time to the user to help us to penetrate the user more. And many of this contribute to our growth faster than we expected earlier 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 user are willing to spend more with the platform as well. I think Forrest shared that the users purchase more than before they joined the program. So in a way, it's 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.

Your next question comes from Piyush Choudhary with HSBC.

Congratulations for great set of numbers. 2 questions. Firstly, for Shopee Logistics, what percentage of orders are now fulfilled by [ XPX ] within Asia and Brazil. How has it changed over the last 1 year or so how much of increase in your cost of services is driven by this logistics investment and the outlook for this cost item? That is first.

Secondly, on Garena, can you share the outlook for Free Fire for 2026 after successful 2025? Any plant IP collaborations, any new game launches?

On the SPX, I do believe we shared before, more than half of our orders delivered through our SPX and the percentage has been increasing, let's say, overall 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 that contributed to our growth as well because this lower than the cost buyer have to pay to receive orders. 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 SPX costs. Forrest mentioned that in Brazil, we reduced by way in time by 2 days, if you look at year-to-year. The -- in Asia, we also reduced 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 helped to contribute to our growth, as you see.

For the Garena outlook and the -- Well, we are very excited to observe the momentum. I think this is extremely valuable like -- since the turnaround like 2 years after the post COVID headwind. And in 2024, we have a very, very high growth, and that is the strong momentum continuing into [ 2005 ]. Actually, the growth is -- it's even accelerated this year compared to last year. So the momentum is still very, very strong. So we remain very optimistic and the positive like for the [ 2006 ], we believe the user base will continue to grow. The content that the offerings will be more like the experience, user experience more immersive. And I think like the specific this year with a very, very successful IP collaborations. And I think Garena an organization, we unlocked a very important capability. So how to continually work with 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 are going to be able to experience that he's a very, very such -- very, very powerful distribution platform, distribution channels. So we'll continue to work with more IP. But of course, we are also very, very selective as well. And we're also quite excited to kind of see what like the AI can do in terms of boosting the both the creative side, production side and also the user experience side. We think that is a potential boost for the future growth as well.

At this moment, we are in the process of like for the detailed planning of next year. I think probably we'll have a better sense, we're ready to share to the market what will be the specific outlook we received for Garena in 2026 next quarter. We always have some new games in our pipeline. We have a very, very strong and dedicated experience developed first to especially focus on the new games. And we have several games already in the pipeline or like in some markets already live in the trial period where learning experiences. And at this moment, I think it'd be premature to project what is the impact, I think, considering the size of the scale of the Free Fire in terms of the user base and the revenue and perfect, I don't think at this moment, even if we have any new games at early stage will be made significant impact in terms of the pro-user numbers and the revenue and the financial side.

But we're going to continue to put a lot of effort. And I think that through the new game development, we also learned about the different genes and we also learned the difference about some new markets we haven't been to. I think this will remain at a very, very good opportunity for future growth. So when we have like a [indiscernible] is the right time to share. So we'll also keep all our shareholders and investors informed.

Your next question comes from Jiong Shao with Barclays.

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-over-quarter. So I suspect it's kind of negative initially. And is there a time frame to kind of reach breakeven for the members?

Second question is about AI. I think Forrest did reason they did some media interviews talking about AI 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 -- you want to because some investors are worried about some massive AI CapEx that may be affiliate associated with any kind of new venture?

On the VIP program, we are still in a very early stage of rolling out the program as you public can see, it's only a few months, but we see a very good growth on the users sign up. If you look at sort of quarter-to-quarter, we see a $0.75 growth on the members. In terms of the GMV penetration, we are seeing the early states, we're selling the teams, and we believe this can be a lot higher public similar to the percentage you observed in other part of the world in terms of the penetration.

The -- I think the important thing for us to look at the economics is that the -- we would like to make sure the members not only receive better benefit from the platform because they are paid members and 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, was videos -- in the end, we were with FTP plays. We also work with ChatGPT as well of a free program to the VIP members. I think all those will help us to have 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 will bring to the program has good retention. And in our early market, we see the retention improve almost doubled from the last quarter to this quarter period of 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 confused payment. We are working on multiple a way to ensure that the retention goes well with the program well, especially together with our digital finance side through a SPayLater as well.

Sure. John, on the AI question, yes, I mean, as I shared during the interview, you mentioned we are deeply excited about this new technology. I think that represent a fundamental technological revolution and which will create massive new opportunities and supercharge technology's ability to on value -- unlock value for people everywhere. I think is extremely exciting for the market area which still like millions of -- hundreds of millions of people is underserved, right? And we have seen that uplift in the past 10 years through the mobile Internet revolution, and we have observed and how that much the smartphone, the mobile Internet transfer and the [indiscernible] life help bring how much like a joy convenience to people's lives. And of course, we are part of this transformation, and that is what we are really as a company and what it's about our mission.

We try to focus on the applications and how to connect those are like fantastic technology to the people's daily life every corner of the -- like from every corner of the world. And we believe that we'll see 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 -- like the things you mentioned, okay, we probably were not going to do what the the big pack is going to do. We're not going to like develop trying to make some fundamental large language model breakthrough. We're not going to build data centers. I think like for that part, we were very much like open to work with all the like a big tax -- we kind of -- we have a lot of admiration with respect to how much effort and how much they can do to continually have the breakthrough of the technology and make the technology more powerful and more useful. And what we are going to more focus on, applications and how that technology build the silicon value anywhere in the world transform to a consumer's daily life, small businesses like in Indonesia, in Vietnam, in Brazil.

So that was expected what we're good at. And we have a lot of practice that 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 critical and bottom market approach. So -- and we are very much focused on seeing the immediate return the result as I shared in my opening, right? And we are very excited to see some very critical use in Shopee, right? And how much this kind of help on the advertising conversion, how to make the product discovery easier and it's like a more discovery beyond traditional search, right, how to help sellers improve the product leasing quality and how to improve the base retention and the conversion rate. And I think I probably shared in the previous quarter -- like a quarter and also this is -- we see the improvement in terms of the customer service capability and now a majority of our customer service is it's handled by AI like a chatbot and the satisfaction rate is very, very high.

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

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

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

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