Sea Limited Q1 Earnings Miss Estimates, Revenues Increase Y/Y

Sea Limited SE reported adjusted earnings of 84 cents per share in the first quarter of 2026, which decreased 2.3% from the year-ago quarter and missed the Zacks Consensus Estimate by 12.5%.Revenues of $7.1 billion increased 46.6% year over year and beat the Zacks Consensus Estimate of $6.95 billion, primarily driven by growth in Shopee and Monee.SE's Q1 Revenue Mix Tilts Further Toward ServicesSea Limited’s top-line mix remained services-heavy, with Service revenues of $6.5 billion and sales of goods of $612.4 million, which grew 46.2% and 50.6% year over year, respectively. The skew toward services reflects the company’s reliance on transaction-based fees, advertising and financial services income alongside its growing physical-goods footprint.Revenue growth also stayed broad-based across Sea Limited’s three reportable segments: Shopee, Monee and Garena.Sea Limited Sponsored ADR Price, Consensus and EPS Surprise Sea Limited Sponsored ADR price-consensus-eps-surprise-chart | Sea Limited Sponsored ADR QuoteSE's Shopee Mix Shifts Toward Core Marketplace FeesE-commerce (Shopee) generated $5.1 billion of GAAP revenues in the quarter, up 45.1% year over year, aided by marketplace activity and ad-led monetization. Within that total, GAAP marketplace revenues were $4.5 billion, up 44.4%, highlighting a resilient take rate as transaction volumes expanded.The composition of marketplace revenues also shifted. Core marketplace revenues, which include transaction-based fees and advertising, rose 61.0% year over year to $3.8 billion. Value-added services revenues, largely logistics-related, declined 8.1% to $691.6 million due to a higher net-off against shipping subsidies.Shopee's adjusted EBITDA reached $223.2 million in the first quarter, down sharply from $264.4 million in the same period last year. GMV increased by 30.2% year on year to $37.3 billion in the first quarter. Gross orders for the reported quarter reached 4.0 billion, representing a 29.3% year-over-year increase.SE's Monee Credit Book Climbs as Asset Quality HoldsDigital Financial Services (Monee) continued to be Sea Limited’s fastest-growing revenue engine, with GAAP revenues rising 57.8% year over year to $1.2 billion. Management attributed the growth primarily to the credit business as lending activity increased, helping sustain profitability gains in digital financial services.On the operating side, Monee delivered adjusted EBITDA of $275.2 million, up 14.0%. Consumer and SME loans principal outstanding reached $9.9 billion at quarter end, up 71.3% year over year, consisting of $8.8 billion of on-book loans and $1.1 billion off-book. Non-performing loans’ past due more than 90 days were 1.1% of loans principal outstanding, stable sequentially.Sea Limited's Garena Sees Bookings Lift and Paying Users RiseDigital Entertainment’s (Garena) operating backdrop improved meaningfully in early 2026, with bookings increasing 20.1% year over year to $931.4 million. GAAP revenues rose 40.6% to $696.6 million, supported by game engagement and monetization across key titles.Profitability remained strong, as Garena’s adjusted EBITDA climbed 25.2% to $573.6 million, representing 61.6% of bookings versus 59.1% a year ago.Quarterly active users were 666.5 million, and quarterly paying users increased 12.4% to 72.6 million, lifting the paying user ratio to 10.9% from 9.8%. Average bookings per user improved to $1.40 from $1.17 year over year.SE's Spending and Credit Costs Weigh on Q1 MarginsDespite sharp revenue growth, margin performance was pressured by higher operating costs. Gross profit increased 40.7% year over year to $3.1 billion, but gross margin declined to 44.3% from 46.2% as cost of revenues climbed 51.7% to $4.0 billion.Operating expenses expanded 43.4% to $2.6 billion, caused by sales and marketing expense of $1.4 billion (up 52.1%) and provision for credit losses of $465.5 million (up 65.1%). Operating income still grew 29.9% to $593.0 million, but net income rose a more modest 6.7% to $438.2 million, reflecting heavier taxes and higher credit-related costs.SE’s Balance Sheet & Cash FlowAs of March 31, 2026, Sea Limited had cash and cash equivalents of $4.00 billion, compared with $4.16 billion as of Dec. 31, 2025.During the first quarter of 2026, the company repurchased 1.8 million shares for $168.4 million under its $1.0 billion share repurchase program.SE generated $1.1 billion in cash from operating activities in the reported quarter, compared with $1.48 billion in the previous quarter.SE’s Zacks Rank & Stocks to ConsiderCurrently, Sea Limited carries a Zacks Rank #4 (Sell).Cisco Systems CSCO, Analog Devices ADI and NVIDIA NVDA are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Cisco Systems’ shares have gained 29.3% in the year-to-date period. CSCO is set to report its third-quarter fiscal 2026 results on May 13.Analog Devices’ shares have jumped 54.7% year to date. ADI is scheduled to report its second-quarter fiscal 2026 results on May 20.NVIDIA shares have returned 18.1% year to date. NVDA is scheduled to report its first-quarter fiscal 2027 results on May 20.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks