Sea has re-emerged as a development all-star after an extended hangover after the early days of the COVID pandemic.
Shares of Southeast Asian super-app firm Sea Restricted (SE 19.52%) had rocketed 20.5% increased on Tuesday as of 12:30 p.m.
Sea reported earnings this morning that, whereas lacking estimates on the underside line, trounced estimates for income development, with energy throughout all three of its companies. As a high-growth inventory, that top-line energy seems to be what traders care about most.
Sea fires on all cylinders
Within the second quarter, Sea noticed income rally 38.2% to $5.3 billion, whereas earnings per share of $0.65 missed expectations by $0.04. Nonetheless, Sea was worthwhile throughout its three companies encompassing cell video games, e-commerce, and digital finance.
In e-commerce, income was up 33.7% on gross market worth (GMV) development of 28.2%, whereas section EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization) flipped from a $9.2 million loss a yr in the past to a $227.7 million revenue. In digital monetary providers, income grew a whopping 70%, whereas adjusted EBITDA rallied 55% to $255.5 million. And in digital leisure, which consists of cell sport publishing and Sea’s self-produced hit Free Hearth, bookings grew 23.2% yr over yr, with adjusted EBITDA up 21.6% to $368.2 million.
The mixed development resulted in whopping 364% development in EPS, displaying Sea’s profitability starting to take off from a near-breakeven degree a yr in the past.
Picture supply: Getty Pictures.
Sea additionally highlighted a couple of large milestones. These included the eighth anniversary of Free Hearth, displaying off the “evergreen” nature of this sport, which extremely managed to develop bookings double-digits relative to final yr. Administration additionally stated it now expects 30% bookings development within the digital leisure enterprise this yr, which is an enormous enchancment after an extended hangover following the early days of the COVID pandemic.
In Shopee e-commerce, Sea additionally marked its fifth anniversary in Brazil, its solely market outdoors of Southeast Asia. The corporate claimed in its press launch that after simply 5 years it is turn out to be the e-commerce chief within the nation by order quantity, which I am certain is catching the eye of MercadoLibre (NASDAQ: MELI) traders right this moment.
In the meantime, Sea’s digital finance arm is starting to see extra adoption outdoors the Shopee platform, with Malaysia seeing 40% quarter-over-quarter development in off-Shopee SPayLater loans, now making up greater than 20% of the SPayLater portfolio within the nation. Extra penetration outdoors of Shopee means SeaMoney could possibly be on its approach to changing into a serious economywide monetary establishment.
Excessive development at an affordable value
With its extremely worthwhile cell video games enterprise having stabilized, Sea’s e-commerce and finance arms are actually actually gaining traction, rising strongly in a worthwhile method.
Whereas Sea might look like an costly inventory buying and selling at 46 instances this yr’s and 31 instances 2026’s earnings estimates, that is additionally not a completely bananas value to pay for a corporation that is firing on all cylinders throughout not one however a number of high-growth companies and geographies.
Billy Duberstein and/or his shoppers have positions in Sea Restricted. The Motley Idiot has positions in and recommends MercadoLibre and Sea Restricted. The Motley Idiot has a disclosure coverage.
