Sea Limited (SE -1.29%) is back in the headlines -- and this time, for the right reasons. Once dismissed as a pandemic-era darling that couldn't sustain its momentum, the Singapore-based tech giant has been firing on all cylinders of late, with sustained profitability and growth across all segments.
Let's explore the factors that have gotten investors excited about Sea again.
Image source: Getty Images.
Sea has sustained its profitability in the past two years
For most of its early life, Sea pursued aggressive expansion in e-commerce and fintech by heavily subsidizing users and merchants. In particular, the tech giant expanded rapidly across Southeast Asia and Latin America by offering free shipping and discounts. While this approach led to hyper-growth, it came at a huge cost to the company, prompting investors to compare it to failed e-commerce companies, such as Wish.
Knowing such an aggressive strategy could not be sustained, Sea made a major pivot a few years ago to cut costs and investment, focusing instead on sustainable growth. While the pivot led to slower growth, it helped set the future direction for the tech conglomerate. More importantly, it brought in the first profitable year in 2023 -- a positive $163 million, as opposed to a net loss of $1.7 billion a year earlier.
Sea's first profitable year was a tipping point, since it demonstrated to investors the feasibility of its business model. The next crucial step occurred in 2024, when Sea not only delivered a net profit on the group level but also achieved positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for its e-commerce business.
With two years of profits under its belt, Sea has demonstrated to investors that its business model is effective and that its newly adopted strategy of sustainable growth, relying on internal profits for expansion, is the way forward.
Shopee continues its dominance
Founded in 2015, Shopee has grown from a scrappy newcomer to the undisputed e-commerce leader in Southeast Asia and a top player in Brazil. By 2024, Shopee commanded nearly 50% market share in Southeast Asia, placing it among the top three in every market where it operates.
This dominant market share is even more impressive considering the increasing competition from Lazada, TikTok Shop, and other platforms. Shopee has managed to retain consumer mindshare -- and, thus, wallet share -- through several key strategies: Improving logistics, driving cost efficiencies, and offering a growing selection of value-for-money products.
For perspective, Shopee delivered solid growth across all fronts in the first quarter of 2025, with gross order, gross merchandise value (GMV), and revenue growing by 21%, 22%, and 28%, respectively.
With economies of scale firmly in its favor, Shopee is doubling down on long-term investments -- enhancing its price competitiveness, improving service quality, and strengthening its content ecosystem. These efforts will likely keep the platform sticky and position it well for continued growth.
Garena is back in growth mode
Once the gem in Sea, Garena has been through a tough period, with multiple years of declining revenue and profitability following its reopening after pandemic lockdowns. But lately, even this problem child has made a solid comeback.
In the first quarter of 2025, Garena delivered a remarkable 51% increase in bookings to $775 million on the back of higher-paying users and bookings per user. Adjusted EBITDA improved even more, up by 56.8% year over year to $458 million.
While it's still early days (we don't know whether Garena can sustain its growth), it's useful to note that bookings have been trending upward in the last four quarters. Similarly, quarterly active users have remained above 600 million since the second quarter of 2024, thanks to the strength of Garena's flagship game Freefire, which remains the world's largest mobile game by daily active users and downloads.
In other words, there are good reasons to be optimistic about Garena's prospects in the coming quarters.
What it means for investors
Sea Limited has transitioned from a cash-burning growth story to a leaner, more focused, and profitable company. While risks remain, especially in competitive and regulatory environments, the company now has a track record to support its long-term vision.
In other words, Sea Limited may finally be sailing on calmer, more promising waters.
