"Southeast Asia's Small Tencent" Sea Sees 47% Increase in Q1 Revenue, Pre-Market Jumps Over 11%

Internet giant Sea Limited, known as the "Little Tencent of Southeast Asia", has released a stronger-than-expected first-quarter financial report. The company's net profit for the quarter ending in March increased by 6% to $428 million, higher than the average expectation of $394 million from analysts compiled by Bloomberg; revenue grew by 47% to $7.1 billion, also exceeding expectations.

After the release of the financial report, the company's stock price rose by more than 11% before the market opened.

Its e-commerce platform, Shopee, known as the "Southeast Asian version of Pinduoduo/Taobao," has maintained its growth momentum amid fierce price competition in Southeast Asian e-commerce. Sea stated that the e-commerce gross merchandise volume is still expected to grow by about 25% by 2026, indicating that the company has no plans to lower its annual expansion targets for the time being.

Growth is consuming part of the profit margin. Shopee's revenue in the first quarter grew by about 45%, while adjusted EBITDA fell by 16%, meaning the company still needs to allocate more resources to logistics, user retention, and platform operations to compete against competitors such as TikTok, Lazada, and Temu.

The bigger variable comes from Indonesian regulation. Indonesian President Prabow Subianto proposed last week to restrict commissions that platforms can earn from motorcycle drivers, raising market concerns that such policies could spill over into the logistics sector that supports Sea's e-commerce fulfillment; potential child online shopping restrictions in Indonesia also add uncertainty on the demand side.

Sea is also attempting to position AI as the narrative for the next phase of growth. The company has already used AI for product recommendations and seller tools, and in February announced a partnership with Google to integrate AI into its operational processes, including the development of AI shopping agents.