Sea Limited’s Shopee Drives 30% Revenue Growth While Credit Losses Surge
Sea Limited’s Shopee processed 10 billion orders worth $90.6 billion in the first nine months of 2025, driving revenue growth of over 30%, its fastest four-year pace. Its digital finance arm’s credit loss provisions spiked and higher costs are squeezing margins, and the stock is down 35% from its 52-week high.
1. Accelerating Digital Finance Revenue
Sea Limited’s digital finance unit, Monee, posted revenue of $2.3 billion in the third quarter of 2025, up 45% year-over-year. This segment accounted for 28% of total company revenue during the period, compared with 20% a year earlier. Growth was driven by expanded merchant lending to Shopee sellers—originations rose 52% to $1.1 billion—and the rollout of consumer 'buy now, pay later' loans across four Southeast Asian markets. The division now serves more than 12 million unique borrowers, up from 8 million in Q3 2024, helping Sea’s overall revenue grow 32% to $8.2 billion through the first nine months of the year.
2. Surging Credit Loss Provisions
Credit loss provisions at Sea’s digital finance arm surged 120% year-over-year to $600 million in Q3 2025, driven by higher default rates on unsecured consumer loans and tighter regulatory requirements in Indonesia and Thailand. The provisions ratio climbed to 26% of finance revenue, compared with 15% a year ago. Management flagged the need to build additional reserves following a 4.8% rise in the delinquency rate among consumer borrowers, up from 3.2% at the end of 2024.
3. Rising Costs and Margin Compression
Operating expenses across Sea Limited rose 30% in Q3 to $3.1 billion, reflecting expanded hiring in credit risk, customer-acquisition spending in the finance business, and technology investments to shore up underwriting and fraud detection. As a result, consolidated adjusted EBITDA margin fell from 14% in Q3 2024 to 5% in Q3 2025. Finance-related technology and development costs alone climbed 65% to $420 million, outpacing the 52% increase in finance revenue. Management has guided for full-year operating expenses to grow at least 25%, signaling continued pressure on profitability into 2026.
4. Strategic Response and Outlook
Sea has announced plans to tighten underwriting standards, including raising minimum merchant credit grades and shortening consumer loan tenors, aiming to reduce future provisioning needs by 15% in 2026. The company also plans to roll out dynamic interest-rate models using machine-learning underwriting across all markets by mid-2026. While finance unit profitability is expected to remain muted in the near term, Sea projects digital finance revenue growth of at least 35% next year, which, if combined with lower credit costs, could help restore segment EBITDA margin toward the mid-teens by Q4 2026.