Sea Limited: Shopee's New Buyer Growth Accelerates to 35% as AI-Driven Underwriting Cuts Approval Times and Monee Pushes Deeper Into Brazil
Second quarter 2026 results, reported August 11, 2026
Sea Limited delivered a quarter that underscores an increasingly rare combination in Southeast Asian internet: accelerating growth alongside expanding profitability. Revenue rose 48% year-on-year to $7.8 billion, while adjusted EBITDA climbed to $917 million. The standout metric was Shopee's new buyer acquisition, with average monthly new active buyers up more than 35% year-on-year, a sharp acceleration from prior quarters that management attributed to brand campaigns, expanded content channels and broader logistics offerings. Chairman and CEO Forrest Li said the company is now confident Shopee will hit $1 billion in adjusted EBITDA for the full year, a milestone that would mark a meaningful inflection in the platform's path to sustainable profitability.
AI Underwriting Becomes a Real Credit Differentiator
The most significant new disclosure came from Monee, Sea's fintech arm, where management detailed how transformer-based risk models, architecturally similar to those underpinning large language models, are now driving core underwriting decisions. CFO Tony Hou explained that the models are pretrained on the company's behavioral and transactional data across the ecosystem, learning from the full sequence of user actions over time rather than static snapshots. The payoff has been tangible: approval rates have improved by around 10% versus prior models while holding risk constant, and AI-based document verification has cut income-review time by roughly 95% while maintaining accuracy, allowing near-instant responses to credit limit requests. This is a capability investors have not previously had visibility into with this level of technical specificity, and it matters because it directly explains how Monee has been able to widen its net, adding 5.3 million unique first-time borrowers this quarter, without degrading asset quality. The 90-day NPL ratio held steady at 1.0% even as the loan book grew 52% year-on-year to $11.1 billion.
Shopee's Take Rate Still Has Room to Run
Ad revenue grew more than 70% year-on-year with take rate up over 90 basis points, and management was unusually direct in signaling this is not close to peaking. Hou walked through a four-factor framework the company uses to judge take rate increases: reinvestment into ecosystem growth, price competitiveness versus rival platforms, pricing versus offline retail, and impact on seller profitability. His conclusion was blunt: “We still see opportunities to increase our take rate, not only from commission, but also from the paid ads.” Tools like the Smart Voucher, which pairs personalized discounts with ads, and GMV Max diagnostic tools for sellers were cited as concrete AI-driven levers behind the take rate gains, alongside a new generative recommendation and search algorithm the company calls "GR," which management said is driving a meaningful lift in conversion.
Fulfillment Investment Cycle Still Early, Despite Scale Gains
Fulfillment order volume grew more than 20% quarter-on-quarter, with next-day delivery rates in some markets exceeding 60%, well above platform average. But Li was candid that Sea remains a distant second in scale to logistics-heavy competitors, particularly in Brazil: “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... we're still much smaller as the size compared to them.” The company continues to run this expansion with a capital-light model, renting rather than owning warehouses, and is only in early testing of automation to bring down operating costs further. This suggests the profitability gains seen so far are coming more from operating leverage and seller/buyer adoption than from CapEx-heavy infrastructure builds, a distinction that matters for how investors should model incremental margin.
Brazil: Growing Faster Than the Market Despite Rivals Cutting Prices
Analysts pressed management on a competitor's move to lower take rates and free shipping thresholds in Brazil. Li's response was confident bordering on dismissive of the threat: Shopee's price competitiveness remains "a lot stronger than the competitors in the region, even after their change." Brazil GMV growth continues to outpace the broader market, driven by active buyer growth, higher purchase frequency and larger basket sizes, while GMV from Shopee Mall sellers more than doubled year-on-year as the platform pushes upmarket. Sea is layering fintech onto this growth, with a standalone Monee app coming to Brazil built on a CFI license comparable to what Mercado Pago offers, positioning the company to compete directly in payments and credit rather than just e-commerce.
Margin Trajectory: Sea Reiterates 2-3% Long-Term EBITDA Target, Says Path Is "Relatively Straightforward"
UBS's Navin Killa pushed management on the timeline to Sea's medium-term e-commerce EBITDA margin target of 2% to 3% of GMV. Li's response quantified the gap for the first time in concrete terms: Shopee is currently running at roughly 0.67%, meaning the company needs to find "1-plus percent" through a combination of moderating investment in maturing programs, structural cost improvements in logistics and fulfillment, and continued take rate gains. Notably, full-year EBITDA guidance implies second-half EBITDA will exceed first-half EBITDA in absolute dollar terms, a reversal from last year's pattern when second-half profitability came in lower, adding credibility to management's claim that the growth-versus-profitability trade-off is now tilting favorably.
Garena Diversifies Beyond Free Fire With Major New IP
Garena bookings grew 15% year-on-year to $764 million, still anchored by Free Fire, which in its ninth year continues to draw more than 100 million average daily active users. More strategically important, however, is the announcement of two new mobile titles: Palworld Online, a self-developed open-world survival game licensed from Pocketpair that will get a global publishing rollout, and Monster Hunter Outlanders, a collaboration with Tencent using Capcom's franchise, targeted at Southeast Asia, Latin America, Taiwan and potentially the Middle East later this year. This marks Sea's clearest articulated attempt yet to reduce Garena's dependence on a single franchise, though execution risk remains given the company's limited track record publishing major third-party IP at global scale.