What’s Behind Sea Limited’s 46.6% Growth? Shopee Ads, Logistics, VIP, and Brazil

24 min read | Sea Limited Q1 2026 Earnings Review

Preface

Sea Limited delivered a strong quarter, with revenue growing 46.6%. In this article, I will mainly focus on what happened during the quarter. In the future, I will release a more in-depth article on Shopee, including some commentary on MercadoLibre and other e-commerce companies.

You can also check out my first two articles on Sea Limited: What’s Shopee Strategy in 2026 and Sea Limited’s Monee in 2026: What It’s Doing and What to Expect Going Forward. Both articles received very positive feedback. I think they are among the best pieces you can find on Sea Limited’s strategy. The things I discussed in those articles played out this quarter, and I believe many of those points will continue to matter in the coming quarters, and potentially for years.

Now, let’s focus on this quarter:

The things in this article

• Why did Shopee beat revenue? Was there a change in strategy?

• Shopee’s ads growth and the impact of Shopee GMV MAX

• The current stage and progress of Shopee VIP — I still expect it to surpass 25M users by year-end

• Why fulfillment matters for product selection in remote areas

• The difference between Grab and Shopee quick commerce strategies

• My concerns about the Monee acquisition and credit deterioration

• Why Brazil is now Shopee’s most important market and what it’s current growth

Besides, I think the management team is deliberately slowing the growth of both Shopee and Monee because of the fear of a drop in net income. I think the management team now does really care about “financial discipline” in fulfilling the guidance.

Shopee beat on revenue

This quarter, Shopee’s GMV growth was 30%, pretty much in line with my expectation. The real surprise was that marketplace revenue grew 44%, up from 36% last quarter. I think this was mostly due to the unexpected increase in take rates compared with the previous year.

The table shows that take rates increased by 0.26 percentage points QoQ, compared to a 0.26 point decline a year earlier. On a YoY basis, take rates were up 1.17 percentage points, which is a much larger improvement than in any quarter of 2025.

I think two factors drove the take-rate improvement. First, Shopee appears to have a much stronger ad business now. Second, management seems to have shifted more promotional discounts into logistics subsidies.

The improvement in Shopee’s ad take rate

Shopee started to focus more on ads in 2024Q2, as management mentioned in the earnings call:

One area we are placing greater focus on is improving our ad take rate. Currently, our ad take rate is lower than the industry average we observe in more mature e-commerce markets.

Over the quarter, we have made it easier and more attractive for sellers to join our ad platform. We also have a dedicated tech team working on improving our ad bidding algorithms to help sellers achieve higher returns from their advertising spend.

From then on, Shopee’s ads growth rate has been on an accelerated path.

2024Q2: ~ started to focus on ads
2024Q3: ~40%+ YoY (GMV MAX was officially launched)
2024Q4: ~50%
2025Q1 : ~56%
2025Q2: ~70% (ads take rate was around 2% GMV, + 70 basis point)
2025Q3: ~75% (+ 80 basis point)
2025Q4: ~75% (+ 80 basis point)
2026Q1: ~80% (+ 90 basis point)

In 2026Q1, ad spend increased by over 80% year-on-year, and the ad take rate also increased by more than 90 basis points. This represents another acceleration from the 75% growth last quarter.

The acceleration in growth was largely attributable to the new ad product “GMV MAX” that was launched in 2024Q3. GMV MAX has meaningfully shifted Shopee ads from a more traditional seller-controlled bidding, placement, and keyword-management system to a Shopee-controlled automated performance and ROAS-based ad system.

The shift to an automated performance system isn’t unique to Shopee. Both China’s eCommerce giant Pinduoduo and the world’s third-biggest ad network, AppLovin, were proponents of this method.

Shopee’s ad take rate should soon surpass or may have already surpassed 3% of GMV. The mid-term target would be 4–5%. I think in the long term, the take rate might be able to surpass 7% of GMV. There is still very sizable room for Shopee’s ads to grow.

The shift from discounts to logistics subsidies

If we look only at the take-rate increase in 2026Q1, it is easy to attribute most of the improvement to Shopee’s strong ad growth. But if we look closer, we see a different story driven by logistics subsidies.

The table shows that the 1.17 percentage-point increase in take rates was driven by a 1.95 percentage-point increase in the core marketplace take rate, partially offset by a 0.78 percentage-point decline in value-added services.

The latest quarter shows an interesting contrast. Both 2026Q1 and 2025Q1 had similar seasonality, with Ramadan and Chinese New Year both falling within the quarter. However, the QoQ change in Sales and Marketing expense was very different. In 2026Q1, Sales and Marketing expense grew 1.9% QoQ, compared to a 9% decline last year.

I personally think this is highly attributable to the change in promotion strategy. Shopee recognizes revenue on a net basis, so both platform discounts, e.g., 15% off coupons, and free shipping coupons reduce its revenue on the transaction. If the revenue isn’t enough to offset the subsidy, the excess amount becomes Sales and Marketing expense.

This is the reason take-rate improvements usually happen in non-promotion quarters, despite Shopee charging higher commissions and getting much higher usage of its ad offerings in promotion seasons.

What happened this quarter is interesting. Despite Shopee increasing its Sales and Marketing expense sequentially, its core marketplace revenue still grew sequentially by 0.4%, compared to a drop of 0.1% last year.

I personally think this increase in both core marketplace take rates and Sales and Marketing expense reflects the new strategy Shopee is pursuing — an even stronger emphasis on platform-wide free shipping standards.

The first country that went through this shift was Vietnam in 2025Q2. Before this shift, sellers could decide for themselves whether to pay a higher commission to join the shipping subsidy program. After the shift, nearly all sellers were forced to join the platform’s unified shipping subsidy program.

The unified shipping subsidy program seems to be a success. In 2026Q1, Shopee also forced all sellers in both Taiwan and Brazil to join a similar program. I expect the platform-wide unified free shipping push will continue to expand to other countries.

I will share deeper implications and more details in a future article.

Shopee VIP surpass 10M subscribers

In my previous article What’s Shopee’s strategy for 2026? I compared Shopee VIP with two other types of eCommerce subscription models: free-shipping-led programs such as Amazon Prime and Coupang WOW, and loyalty- or discount-led programs such as Alibaba’s 88VIP and JD’s JD PLUS.

I also shared my model for Shopee VIP reaching 25M paid subscribers by the end of 2025, and eventually surpassing 100M paid subscribers over the longer term. I still hold that target, even though growth was “only” 40% in 26Q1. In my view, Shopee VIP’s growth rate remains on track for the 25M subscriber goal.

I think Shopee has just passed the stage of optimizing for retention in some countries, where retention is now averaging above 80% by the end of this quarter. Since April 2026, the annual subscription plan has started to roll out at full scale in Taiwan, while other countries have also shown clearer rollout progress. Indonesia and Brazil remain the only two countries without an annual subscription plan. In several other markets, the plan is still limited to selected users and has not yet reached a full-scale launch.

Some More Color on Shopee VIP

Shopee VIP members now contribute around 20% of GMV across Asia, and I believe they will eventually account for the majority of Shopee’s overall GMV.

I view the membership program less as a free-shipping program and more as a loyalty program designed to increase purchase frequency.

Over the past few years, Shopee has repeatedly used lower shipping thresholds to pull forward order volume and further reduce logistics costs. Lowering the cost to serve is Shopee’s way of strengthening its competitive moat.

The current investment cycle follows the same logic. Even without VIP, Shopee would still lower the shipping threshold eventually. Now, Shopee is just giving paid VIP members first access to these shipping benefits.

Shopee’s real goal is to build up a loyalty program in order to offer price discrimination between members and non-members. At this stage, the subscription fee itself is not important. It is mainly a filter to identify higher-intent customers.

For now, Shopee literally doesn’t care about the subscription fee. Take the market I’m from as an example. In Taiwan, Shopee not only gives a free trial to every user. It also gives out US$1.90 worth of cash back to every single subscriber and, at the same time, gives out tons of super generous subscriber-exclusive discount coupons. And most importantly, the subscription price is only US$1.90. This means that the cash back itself will immediately pay back the subscription on its own.

Singapore’s VIP program looks similar to Taiwan’s. Both directly offer very generous cashback. In other countries, the structure looks a bit different: it is more like giving users the option to buy a large bundle of discount and free-shipping coupons at a very low price.

My guess is that Singapore and Taiwan are wealthier markets with less geographic complexity, so Shopee does not need to customize the VIP benefits as much.

In other countries, the offerings should be more localized. For instance, in markets where ShopeeFood was operating, there seems to be a much stronger bundle of quick-commerce benefits. Urban users benefit more from instant-delivery coupons, while users in the countryside likely get more value from reduced shipping fees or faster delivery.

One more thing to note: the subscription also includes priority customer service and benefits from off-Shopee partners such as ChatGPT and Duolingo. In countries with longer-term subscription plans, the fee discounts can be very large. In Taiwan, the yearly plan is roughly 50% cheaper than paying monthly. Indonesia is even more aggressive: the 6-month plan is 66% cheaper than the monthly plan, bringing the total cost of six months of VIP to only about US$1.70.

The Road to Shifting VIP Costs to Sellers

Since the beginning of this investment cycle, Shopee’s marketplace gross margin has clearly come under pressure. In the latest quarter, marketplace gross margin dropped by around 4.5 percentage points year over year. Frankly, I expected an even bigger drop; I suspect the management team is implementing financial discipline in order to control the drop in Shopee EBITDA.

But, the good news is that Shopee seems to be shifting more of the VIP promotion costs to sellers.

In Taiwan, for example, the wording of Shopee VIP promotions has changed from broad category-wide discounts to more brand-specific discounts. This suggests that Shopee may be moving from platform-funded incentives toward more seller- or brand-funded promotions.

The pictures are from Shopee Taiwan’s VIP benefits. Currently, I think the promotion cost offloading is still in a very early stage. In Taiwan, small sellers haven’t gotten access to offer VIP-member-specific discounts. Shopee should still be the one carrying almost all of the cost.

Fulfillment, Selection, and Fast Shipping

Shopee’s ambition is to become the all-in-one shopping app. However, SPX is still mainly strong in C2C logistics. For Shopee to serve more customer needs, it needs to build capabilities beyond traditional C2C delivery.

Fulfillment and quick commerce are the two key pillars Shopee is pursuing to fulfill the goal.

Fulfillment and the selection problem in remote regions

In the previous quarter’s earnings call, management set a goal to double fulfillment order penetration by year-end. This quarter, Shopee’s fulfillment orders increased 25% sequentially. In Asia, more than one-third of parcels fulfilled by Shopee were delivered by the next day.

Interestingly, the ones that benefit the most from fulfillment aren’t the ones that live in the big cities. This is because most sellers already store their inventory near or inside major cities, and C2C logistics are already capable of sending packages between cities within 24 hours. So as a results, most people in the capital zones in Southeast Asia can already receive the packages within 48 hours, or even as short as 24 hours.

The bigger opportunity is in remote areas. Today, much of the platform’s inventory is still concentrated near major cities.

Because shipping to remote regions is costly and time-consuming, buyers in those areas often choose sellers within the same region to save time and money. That means their product selection is much more limited compared with buyers in cities.

With stronger fulfillment capability, Shopee can “forward deploy” products to warehouses closer to remote buyers, using cheaper and more efficient transportation methods.

“Forward deploy” is the key. Instead of relying on airplanes or small trucks to rush individual parcels, Shopee can move inventory in bulk ahead of demand. Once the products are closer to customers, delivery becomes both cheaper and faster.

In short, fulfillment allows Shopee to improve product selection for buyers in remote regions while also lowering delivery costs and shortening delivery times. That could unlock a lot more demand!

Quick Commerce — Shopee vs. Grab

Quick commerce is another focus that Shopee is pursuing. In the latest quarter, order volumes for instant delivery have increased by 35%, with costs reduced by around 20%. By the end of 26Q1, Shopee had around 7,000 offline stores available for instant delivery services.

This puts Shopee directly into one of Grab’s core territories. Grab, as a ride-hailing and food delivery giant, already has more than 10% of its orders coming from quick-commerce-related services.

What makes this competition interesting is that Shopee and Grab are approaching quick commerce from fundamentally different starting points.

For Shopee, quick commerce is mainly about improving the delivery experience for products that are already sold on its platform. For Grab, the focus is more on expanding SKUs and merchant coverage to better serve users using the same underlying on-demand delivery network. This leads to two very different ways of building the business.

Grab’s model is centered around fast delivery. Shopee’s model is more segmented. It basically divides products into three categories:

1. Urgent needs: delivered within 60 minutes

2. High-intent needs: fulfilled within 2~6 hours / same day

3. Other products: shipped through the traditional e-commerce logistics system

For urgent needs, orders are usually fulfilled by nearby local stores and delivered by ShopeeFood riders. The process is very similar to a normal food delivery order.

For high-intent needs, Shopee can send a ShopeeFood rider to the seller’s location, warehouse, or logistics network node, and then deliver the package directly to the buyer. This is still similar to food delivery, but the delivery distance is usually longer, and parcels are often sent in small batches.

For other products, Shopee can continue using its traditional logistics network. In reality, if buyers can wait more than 6 hours and the inventory is already stored within the same city, traditional e-commerce logistics should be able to deliver the package on time.

This is one of the main reasons same-day and next-day delivery services often have strict cut-off times. The quick commerce logistics layer that Shopee is building sits above its traditional logistics system. It gives users more flexibility and serves demand that falls outside normal cut-off times.

Shopee’s quick commerce push is obviously a huge threat to Grab. Shopee is giving out huge logistics subsidies through the VIP program. At the same time, it could also create an opportunity for Grab. If Shopee helps educate users and merchants around quick commerce, Grab may still be able to capture part of the ecosystem that Shopee is building.

In 2025, ShopeeFood holds about 20% of the weighted-average food delivery market in the four countries where it operates. I believe Shopee is currently more focused on strengthening the foundation of quick commerce delivery, especially in the high-intent needs segment.

The next logical step would be a stronger push into food delivery. Food delivery order density is very important to Shopee’s long-term instant delivery cost structure. However, Shopee may still need more time to prepare before it can fully capture this growth. Overall, I expect quick commerce order growth to continue accelerating.

First-Party Offerings

This quarter, first-party offerings have grown 50% year-over-year, significantly faster than GMV growth.

I don’t think this growth should be surprising. Fulfillment is a natural extension of Shopee’s C2C logistics network, and first-party offerings are especially well-suited to the mid-sized warehouses Shopee is now deploying.

At the same time, first-party offerings are generally a very good way to build up the initial supply of quick commerce, and they are also a critical element in increasing competitiveness at the service level.

I personally think Shopee will continue to deepen its first-party offerings, and this segment should keep growing much faster than overall GMV.

However, according to a friend who works in Shopee’s B2C unit, a large portion of Shopee’s first-party offerings operates under a consignment model. As a result, this shift may not be very obvious in the earnings numbers.

Monee

Monee had a decent quarter from a revenue perspective. Revenue growth accelerated to 57.8% year-over-year, slightly up from the 54.3% growth last quarter.

But this is the segments that give me the most concern. I can feel a strong “financial discipline” in the company’s earnings. It feels like management is deliberately limiting investments to sustain profit growth.

I personally don’t like companies controlling earnings deliberately. I know it is good for valuation since there will be more certainty. But I think it contradicts the natural rhythm of a business since each quarter should have different opportunities, and financial engineering might cause companies to lose some opportunities in the long term.

Growth & Credit Risk

Besides the understandable financial discipline, my major concern this quarter is the potential deterioration in both acquisition efficiency and credit performance. This quarter, active credit users were only slightly up, and credit allowance as percentage of receivable increased by 1% compared to last quarter.

The allowance amount is adjusted based on this loan performance during the quarter. Although 11.6% is still relatively low compared to the reported historical high of 13.8%, a 1% increase in a single quarter is still meaningful.

The concern is not just that the growth of loans outstanding has slowed to nearly a two-year low. Monee’s sales and marketing expense has also increased significantly over the past year. Even with sales and marketing expense more than doubling, the pace of acquisition still has not shown meaningful improvement.

The Likely Explanation

I think the likely explanation for Monee’s rising sales and marketing expense is the growth of off-Shopee loans. More specifically, it is being driven by the growth of Off-Shopee SPayLater loans.

In my Monee piece, I mentioned that Monee had hit an inflection point in 2024H2, and one of the major drivers was Off-Shopee SPayLater loans.

Off-Shopee SPayLater loans rely much less on Shopee distribution. They are basically another payment network. At this stage, Shopee likely needs to spend heavily to ramp up offline use cases and build the network effect of off-Shopee SPayLater.

At the end of this quarter, Off-Shopee SPayLater loans in Thailand and Indonesia exceeded 20% of the SPayLater portfolio. These are the two markets after Malaysia to cross this threshold. The overall loan portfolio of Off-Shopee SPayLater should surpass the one-billion mark fairly soon.

But this still does not fully explain the slowdown in active credit user growth. This quarter’s active user growth was the slowest in 10 quarters.

Credit Deterioration & the Slowdown

I think one explanation for Monee’s “potential” credit deterioration is the higher mix of Shopee Brazil’s loan portfolio and the longer loan tenures that Monee was pursuing.

We can see from the charts that long-tenure loans have grown rapidly. At the same time, loan outstanding in Brazil surpassed 1 billion this quarter. As we know, Monee needs a higher credit allowance for longer-term loans to reflect the additional risk, and Brazil’s default rates are multiple times higher than those in other Southeast Asian countries.

I think another reason for the slowdown is Monee’s funding constraints, as deposit growth and off-balance-sheet loans have not been able to catch up with loan book growth. The loan book funded from the balance sheet ballooned from 1.45B to 4.17B in 2025, while Sea Limited’s 2025 adjusted EBITDA was only 3.4B.

I think the need for cash to fund loan book growth is one of the main reasons why, despite announcing a buyback when the share price was $120, they still repurchased very few shares this quarter. Sea Limited has not yet reached the stage where it no longer needs cash.

But even with all those explanations, I still would not completely rule out some pressure in loan underwriting, since they had just rolled out an all-can-apply approach in 25H2. They might still need some time to adjust.

Shopee & Monee Brazil

Brazil has become increasingly important to Sea Limited over the years, and this is clear from the growing emphasis on Brazil in the company’s earnings calls.

Brazil is Sea Limited’s largest market by GDP and appears to be Shopee’s strongest growth markets. In 2026, Shopee Brazil will become Shopee’s second-largest market by GMV. It may even become the largest market by revenue, given its relatively high take rate.

From the picture, we can see that Latin America now accounts for 24% of Sea Limited’s overall revenue, up from 19% in 2024. In 2025, revenue from Latin America grew 69%, which is a very impressive number.

And while Latin America is a huge market for Free Fire, but Garena only contributed around 10.5% of Sea Limited’s overall revenue. Considering Monee still had limited operations in 2025 and Garena’s growth was much slower, I think Shopee Brazil may have grown around 80% in 2025.

The impressive growth did include a decent amount of currency tailwinds. However, I have also been told that GMV growth in Brazil was around 70% in local currency. I can’t verify that number, but it does seem reasonable based on the overall growth in the region.

Brazil Potential

Brazil’s eCommerce penetration rate is still low compared to Southeast Asia, and many of its competitors still operate in a rather old-school way. In my view, the main reason Shopee is not yet the market leader is simply that it entered Brazil quite late.

Shopee only started operating in Brazil in 2019 with a cross-border model. It began focusing more seriously on Brazil in 2020, when it launched the local-to-local model. By comparison, Shopee launched its local-to-local business in other markets back in 2015. This means Shopee Brazil is still at a relatively early stage of development.

In 2026Q1, management revealed that Shopee Mall, Shopee Brazil’s branded section, had reached 15% of overall GMV and had grown by triple digits year over year.

In comparison, Shopee Mall as a whole surpassed the 15% mark in 2022Q1. In that sense, Shopee Brazil is exactly four years behind other markets. Right now, Shopee Brazil is still seen as a more low-end and lower-quality platform, similar to how Shopee was perceived in other markets around five years ago.

However, Shopee has been constantly raising the bar for sellers. Over time, it has successfully climbed the learning curve and become a much better platform, with a large number of quality brand suppliers. Many of the very low-quality white-label products have also been eliminated through competition.

Now, at least in Taiwan, the white-label products mostly come with very decent quality. This is very different from five years ago. I think if Shopee can transform itself across seven markets, I believe it can do the same in Brazil.

You can expect a more detailed comparison of why I think Shopee’s main competitor is pretty old-school. There is a reason why Shopee was able to become the leader by order count and active users in five years of operation. I do expect Shopee to become the market leader by GMV within three years.

Monee Brazil

Monee Brazil is another business with significant potential. MercadoLibre and Nubank have already shown how attractive this space can be, with both companies delivering strong growth and impressive earnings. Overall, Brazil is a much more mature credit market than most Southeast Asian countries, with a relatively smaller underbanked population.

The most shocking thing when I learned about the banking world in Brazil is that it’s a market that has normalized triple-digit interest rates. Credit card revolving and installment interest rates average more than 400% and 190%, respectively. This creates a market where banks and fintech platforms can earn enormous spreads.

Another interesting factor is that Brazilian consumers are very used to paying in installments when shopping. Because of this, the quality of credit products is much more closely tied to conversion rates than in many other markets.

Monee has made significant progress in Brazil over the past few years. It only started its lending business there in late 2023, but Brazil has already become Monee’s fourth market to cross a $1 billion loan book, after Indonesia, Thailand, and Malaysia.

In 2026Q1, Monee Brazil was still growing over 250% year over year. Its on-Shopee SPayLater penetration rate is only around 10%, far below the 30%+ penetration seen in more mature markets. This suggests that Monee Brazil still has a long runway for growth.

The SCFI License

During the quarter, Monee obtained the SCFI license in Brazil. This license should broaden Monee’s foundation in financial services and allow it to build a more complete credit stack. This includes lending and financing, acquiring, selling, refinancing, and administering credit receivables, providing guarantees, and offering new post-paid payment instruments.

One of the most notable benefits is that Monee should be able to offer CDBs, or Certificates of Bank Deposit, to consumers. This could give Monee a new funding source for its credit business and help support further loan book growth.

MercadoLibre obtained the SCFI license at the end of 2020 and started to offer CDBs to consumers in April 2022. I guess we may see Monee Brazil start to roll out more financial services in the next few quarters. Hopefully, this new license can help ease Monee’s funding pressure and support its next stage of growth.

Garena

Overall, my view remains largely the same as last quarter, so I will simply quote what I wrote in my previous earnings call review.

I think compared to fintech, I have even less to say about gaming. I don’t play games, and I know very little about the sector. But despite that, I think Garena also had a wonderful year. Bookings were up 37%, and management is guiding for another double-digit growth year in 2026. At least in the short term, I don’t think gaming will be much of a drag.

My thoughts on gaming are that games are very niche and work in paradigms. The same genre will have a few winners, and the winner will last a very, very long time. If you look at the top games in the world, nearly all of them were first launched more than a decade ago. Good games can become evergreen franchises, and I believe Free Fire is already one of them. Because of that, I’m not too concerned about its long-term sustainability.

In the past few years, the management team seems to have cracked the code for driving growth through deep collaboration with other IPs, such as Squid Game and NARUTO. I believe in the future, the growth trajectory will also highly depend on these IP collaborations. So bookings and revenue would probably fluctuate more accordingly.

One thing I wanted to highlight is that, in gaming, revenue growth may not fully reflect earnings performance. In Garena’s case, game props have a weighted average life of 17 months, which means there can be a meaningful lag between bookings and revenue recognition.

This quarter, active users only grew 1%, while average bookings grew 20%. This also came on top of 36% average bookings growth a year ago, meaning average bookings were up 62.7% over two years!

Management is still guiding for double-digit bookings growth this year, despite the lack of solid active-user growth last year. This makes me wonder whether Garena is trending back toward a healthier user mix, with a greater share of users from wealthier countries, similar to what we saw in 2021.

Overall, I think Garena had a great quarter from a monetization standpoint, especially considering the tough comparison from last year’s NARUTO collaboration-driven quarter. I personally think Q2 year-over-year growth could be even better. Please let me know your thoughts!

Closing thoughts

I think there are still quite a lot of things to unpack from this quarter. I will leave the other stuff for the next few quarters. In my next Shopee article, I will probably focus more on the design philosophy and approach different platforms take. I think it will be a controversial but very interesting piece.

To address some of the questions from my readers on Shopee’s profitability, I think profitability this year remains a bit more uncertain because oil prices could have a meaningful impact on the overall platform economics and economies of developing countries. But the fortunate thing is that Shopee is the lowest-cost retailers. I think it will be less impacted, but that doesn’t mean it won’t suffer.

I think the best scenario is that if governments start encouraging people to drive less in order to save energy, Shopee might receive another Covid-like boost. But this is something I would not look forward to.

The management team is still guiding for Shopee EBITDA earnings growth this year. Since Shopee suffered a YoY decrease in the first quarter, I will assume that management is modeling stronger Shopee EBITDA earnings in the second half of the year.

About the long-term take rates, if we compare Shopee to offline retailers — many of which have gross take rates above 35% — it suggests that Shopee still has at least 50% to 100% room to grow! But it would likely take decades for Shopee to reach that level.

For the EBITDA margin, I think the long-term EBITDA/GMV take rate will be over 4%, or even 6%+. Even eCommerce players in China can monetize healthily despite having five or even six major competitors. Given that Shopee faces less competition and monetizes more of the value stack, I think Shopee could become much more profitable than the Chinese players on a GMV basis.

The top four Chinese players all enjoy a 2.5%+ EBITDA/GMV margin when using a similar GMV methodology. I will provide a much more detailed analysis of Shopee and Chinese eCommerce players in a future article.

Thank you for reading.

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