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DATE

Tuesday, May 12, 2026 at 7:30 a.m. ET

CALL PARTICIPANTS

  • Chairman and Group Chief Executive Officer — Forrest Li
  • Group Chief Financial Officer — Hou Tianyu
  • Head of Investor Relations — Rebecca Lee

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TAKEAWAYS

  • Revenue -- $7.1 billion, up 47% year-on-year, driven by Shopee and SeaMoney.
  • Adjusted EBITDA -- $1 billion, a 9% increase year-on-year, reaching the highest level to date.
  • Shopee GMV -- $37.3 billion, growing 30% year-on-year, with gross orders up 29% during the same period.
  • Shopee Adjusted EBITDA -- $223 million, reflecting increased investment in delivery fulfillment, Shopee VIP, and user acquisition compared to $464 million the previous year.
  • Shopee Ad Revenue -- Up 80% year-on-year, while ad take rate increased by more than 90 basis points among paying sellers; average ad spend per seller rose approximately 35%.
  • VIP Membership -- Exceeded 10 million subscribers across Asia, up over 40% quarter-on-quarter, with retention above 80% and contributing about 20% of GMV.
  • Shopee Instant Delivery -- Order volumes grew over 35%, and cost per order declined around 20% year-on-year; approximately 7,000 offline stores onboarded for instant services by March-end.
  • Shopee Fulfillment Orders -- Increased around 25% sequentially, with over one-third of Asian parcels delivered within the next day in March.
  • Brazil E-Commerce -- Fastest growing Shopee market; Shopee Mall sellers’ GMV more than doubled year-on-year, now representing circa 15% of Brazilian GMV.
  • AI Operational Impact -- AI-enabled initiatives led to a 14% improvement in purchase conversion rates, and around 80% of customer queries managed by chat bots, cutting customer service costs per contact by around 30% year-on-year.
  • SeaMoney Loan Book -- Consumer and SME loans outstanding reached $9.9 billion, up 71% year-on-year, with active credit users rising 35% to over 38 million and average loan per user up 25% to about $250.
  • Brazil Fintech -- Local loan book surpassed $1 billion, marking over 250% year-on-year growth; SPayLater now approximately 10% of Shopee Brazil GMV.
  • Nonperforming Loans -- 90-day nonperforming loan ratio held stable at 1.1%.
  • Money Adjusted EBITDA -- $275 million, a 14% year-on-year rise, while revenue climbed 58% to $1.2 billion.
  • Garena Bookings -- Grew 20% year-on-year to $931 million, with adjusted EBITDA up 25% to $574 million and GAAP revenue rising 41% to $697 million.
  • Free Fire Collaboration -- Jujutsu Kaisen partnership generated over 700 million official content views.
  • Ramadan Campaign -- Achieved global social media impressions exceeding 120 billion, a 70% increase compared to the prior year’s Ramadan campaign.
  • Net Income -- $438 million, up 7% year-on-year.

SUMMARY

Sea Limited (SE +13.27%) detailed substantial revenue growth and expanding profitability in the first quarter, reporting record levels across its e-commerce, fintech, and gaming divisions. Management outlined deliberate investment in key areas, with Shopee amplifying logistics capabilities through new fulfillment centers and AI integration while rolling out its VIP subscription in Brazil. SeaMoney’s lending portfolio diversification included notable traction in both On-Shopee and Off-Shopee scenarios, with Off-Shopee loans now comprising about 20% of the portfolio. Garena’s strong bookings were anchored by global IP collaborations and new content strategies, with evidence of sustainable user engagement and regional monetization improvements.

  • Hou Tianyu stated, "Brazil does grow slightly faster than Southern Asia, but I think it's probably not only driven by the Brazil side," highlighting a broad-based growth contribution.
  • An increase in Shopee’s e-commerce take rates was largely plowed back into growth levers such as fulfillment network and VIP membership, per Hou Tianyu.
  • Hou Tianyu commented, "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," indicating a strategic shift in SeaMoney’s loan origination sources.
  • According to Forrest Li, Arena of Valor’s best ever quarter is not a one-off, with investments in content expected to drive further year-long growth.
  • AI-powered solutions have enhanced both platform-side efficiency and seller tools, contributing to cost control and seller profitability without material adverse reaction to commission changes.
  • Management maintained guidance for Shopee’s annual GMV growth of approximately 25%, with full-year adjusted EBITDA not expected to fall below 2025 levels in absolute terms.
  • Shopee’s Q1 performance was favorably impacted by seasonal factors, but management cautioned that projecting the remainder of the year requires ongoing monitoring of market trends.

INDUSTRY GLOSSARY

  • GMV (Gross Merchandise Value): Total value of all goods sold through the e-commerce platform during a certain period, before deductions like returns or discounts.
  • SPayLater: Sea Limited’s installment and credit product for consumers, allowing deferred payments on Shopee and with other partners.
  • Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for significant non-cash or one-time items as specified by management.
  • Take Rate: Percentage of transaction value captured by the platform through fees, commissions, or monetization activities.
  • Off-Shopee: Lending or fintech activity generated outside the Shopee e-commerce ecosystem, including external partners and offline channels.

Full Conference Call Transcript

Forrest Li: 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.

Hou Tianyu: 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.

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

Operator: [Operator Instructions] Your first question comes from the line of Alicia Yap of Citigroup. .

Alicis a Yap: 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? .

Hou Tianyu: 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 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. .

Forrest Li: 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.

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

Divya Kothiyal: 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 .

Hou Tianyu: 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 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.

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

Navin Killa: 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. .

Hou Tianyu: 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.

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

Jiong Shao: 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 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. .

Hou Tianyu: 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.

Jiong Shao: 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 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 .

Hou Tianyu: 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.

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

Ranjan Sharma: 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? .

Hou Tianyu: 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.

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

Forrest Li: 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.

Operator: My apologies, Ellie Jiang.

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 .

Hou Tianyu: 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 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.

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

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

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