Management expects roughly 25% 2026 growth while targeting higher absolute profitability than 2025.
| Quarter | Q4 FY25 |
|---|---|
| Call date | 2026-03-03 |
| Results reported | 2026-03-03 |
| Length | 62 minutes |
| Speakers | Elson Choi, Investor Relations |
Results, guidance and Q&A analysis for this call
Operator (Operator)
Good morning and good evening to all and welcome to the C-Limited fourth quarter and full year 2025 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by one on your telephone keypad. If you would like to withdraw your questions, please press star and then one again.
Elson Choi (Investor Relations)
For operator assistance throughout the call, please press star and zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Mr. Elson Choi to begin the conference. Please go ahead, sir. Hello, everyone, and welcome to SEIS 2025 Fourth Quarter and Four-Year Earnings Conference Call. I'm Elson from SEIS Investor Relations. On this call, we may make forward-looking statements which are entirely subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures such as adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flow of our major businesses when used as a complement to our GAAP disclosure. For the discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release. In 2025, Shopee served around 400 million active buyers, 20 million sellers, $127 billion in GMB. Money gained over 20 million unique first-time borrowers while maintaining stable risk. We are connected with over 100 million players on average every day throughout the year, generating almost because we chose the right set of strategies and choosing them well. 2026 will be a continuation of this approach. will be consistent and execution remains key. We will double down on operational excellence towards delivering another year of strong growth and healthy profits. Let me kick you a few new efforts to reach monthly purchase frequency in 100% respectively. In 2026, I think us will see natural modes. First, with capabilities, XPS Express now processes 130 million puzzles every day. one of the largest e-commerce logistics solution providers in our market. In 2025, we improved speed and cost efficiency across our market, while customizing delivery options for different user needs. In dense urban areas, we scaled instant and same-day delivery for buyers who value speed and convenience. We expanded instant delivery into additional use cases, including partnering with local supermarkets and suppliers to deliver fresh groceries in time. Our faster delivery services reach a double-digit share of order volume in greater metropolitan areas such as Bangkok and Jakarta. Buyers using instant and same-day delivery also spend around 15% more on average after adoption. At the same time, orders using year-on-year. With our delivery well-scaled, we are seeing encouraging adoption trends and sellers. The Shopee VIP Membership Program in 2025, to deepen engagement, more generous, consistently produced doubles have been spent. VIP members contributed more than 15% of total GMV in the first quarter. Looking on Shopee VIP's success in Asia, we plan to launch it in Brazil in the coming months, in 2025. discovery more engaging and supporting higher purchase conversion. We saw strong momentum in our partnership with YouTube, with orders driven by YouTube content year on year.
Operator (Operator)
If you would like to ask a question during this time, simply press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star and then 1 again.
Operator (Operator)
In the interest of time, we will take a maximum of two questions at the time from each caller. If you wish to ask more questions, please request to join the question queue again after your first question has been addressed. For this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Pang Viet from Goldman Sachs. Your line is now open.
Pang Viet, Goldman Sachs (Analyst)
Hi, management. Thank you very much for the opportunities. Two questions for me. First question is on Shopee. Can you provide more details on how you plan to achieve the target growth in 2026 while maintaining at least flat year-on-year absolute EBITDA? What assumption in specific are you making regarding the competitive landscape? And given the trajectory of lower year-on-year margin potentially, what are the key investment areas and how long should we expect the investment to last? That's question number one. Question number two, this will be on money. The loan book grew very strongly, closing the year more than 80% year-on-year. Can you elaborate on the key drivers of this strong performance? Was this primarily driven by new products, new market, pricing, or stronger demand? Or how should we think particularly about growth in this year, 2026? Likewise, how should we think about the EBITDA margin trend going forward as well for the segment? If we start from the shopping side, the first question, I think as Thoris mentioned in the opening, there are a few areas we are investing for growth. If you start with South Asia, essentially they are... two core elements of this. The first element is to increase the share of wallet of the core users. Second is to increase the buyer base. If you start from the first one, the things we're doing essentially are kind of similar to what we did before, but further enhanced in 2026 is to have better user experience through our logistics. For example, the instant delivery, same-day delivery, so users have a better experience. On top of the general improvement of our delivery qualities, if you're in South Asia, if you try our services, you will see a general faster delivery and better reliability over the year. We're going to continue to do that. The second part is to have a bigger fulfillment network, and I think this will both... Reducing the speed of user will receive items because we can move the items closer to the users before the user actually ordered the items. I think in South Asia, most of countries have set up concentrated in the capital regions. So if you're also capital regions, having a warehouse closer to your area is a big speed improvement. But not only the speed, but also the reliability of the services and also helping the seller to offload many of their work. Essentially, to make it easier for sellers to sell our platform area is to increase the wallet share in the VIP programs. Not only for better service through our own platform with many different external partners to offer benefits to the VIP users as well. As you probably can see that we work with OpenAI and ShareGPTs. We are also working with many local partners in different countries, and there are many global and local partners attending in the process. Again, this is on top of the many other things we are doing, for example, the price initiatives to make sure that our platform is always price competitive. We are also continuing the effort on the content side. Our content share... has been growing over the years, more than 20% already. And I think that trend will still continue, not only for our own content, but we work with external partners like YouTube, like Facebook, more collaboration for the external. Again, this is a broader segment of increasing the wallet share for our core users. Another part of the effort, as I shared earlier, is to increase the buyer base. I think if you look at where we are right now versus, let's say, a year ago, one of the differences you will see that our gross unit economics has been improved meaningfully with the high take rate through the ads as part of the commission effort. It's actually a higher take rate on the top line, but also reduce our cost to serve, essentially, for the logistics plus payment, essentially, the raw cost to serve with the better gross margins. there are more and more users we can serve in a profitable way. So this enables us to be able to essentially serve a larger group of users. And what we are doing in 2026 is essentially to reach out to those users, to convert them to our platform in South Asia. In Brazil and Taiwan, Many things are similar, but I just want to highlight a few things that are specific to the market as well. In Brazil, we have been operating with a much efficient logistics network compared to what's available to the other players in the market with much lower cost. sort of much lower basket size. With this, we would like to essentially build on top of this to high-end customers as well over time in higher basket size categories. In order to do that, There are essentially three things that's important. One is to increase the speed of deliveries. I think as far as mentioned in the opening, we have reduced the shipping speed over time meaningfully. Like if you compare Q4 this year versus Q4 the year before, sorry, I mean 2025 versus 2024, you will see one to two days difference on the specific time in Brazil. And I think that's very important to make sure that the user gets the item faster with a lower cost. without impacting the cost. That's very important. Second one is the fulfillment network that we're doing in Brazil. We've been ramping up this in the past quarter, but 2026 is the really time that we're going to... grow this much larger. I think we spent quite a few months to get all the kind of detail right, the system right, get the location right, get the process right. I think it's a time to actually grow this much faster. The third one is to make sure we have all the right sellers for certain particular categories, like, for example, auto, electronics, et cetera, but also for the more sellers, branded sellers coming to our platform. I think with all the three elements coming in place, I think this way it works to reach out to a new segment. that we are not able to serve in the market. I think in Taiwan, we have a kind of special network we've built for our deliveries. I think that in order for us to capitalize on that, we also start building the fulfillment part as well to have an integrated operation. So not only sort of just plumbing, but it's an integrated operation with our local networks. So we are able to serve the users in a much lower cost end-to-end. but also factor speed compared to what they experienced before with the other networks in the market. Yeah, so all in all, these are the things we are doing. And many of this has an investment cycle as well. If you look at the Fulfillment Network, there will be a period of time where you don't let the clear investment cycle come with it, rather than that it's an ongoing, perpetual investment. For example, if you look at the faster deliveries we're building. I think that it's a pure time that we will scale the delivery fleet, etc. It's a separate fleet from the typical STX. For example, if you look at the VIP program, there's a pure time that will kind of educate the market, and also attract our partners. As we get everything in place, I think the cost structure will be a lot better. I think there's been improvement in many other markets, as you're probably aware. If you look at sort of the overall... our Q4 EBITDA margins around 0.55, as you can see. Compared to the year before, 2024, we are actually improving on the margins. If you look at over the years, in the early part of the year, in 2025, we guided the market to grow around 20%. We are able to grow if you look at the year-to-year growth. If you look over the year, we realized that there are areas we are able to drive the market to grow. We also learned that there are different levers that we can pull to drive the market growth. And 2026 is essentially an extension from where we are in Q4 2025. And if you look at sort of like Q4 2025, if you look at the end of the year, 2026, I do believe that we are able to expand the possibilities of the margin there as well. And this trend has continued over the years. And I think we talked about a 2% to 3% margin for e-commerce businesses over time. I think the belief is still clearly there. And we will demonstrate it to the market over the years. At the same time, we also believe that the market potential is probably larger than many projections before. And the 2026, as we said earlier, we are able to grow around 25% and how the market behaved over the years. And I think the core thing for us is I think the businesses, I think it's in a shape that we are very confident that there are things we can do. to drive the business growth and the things are within our control and the thing we're doing has a clear investment cycle that we can drive over time. Regarding your question on the competitive landscape, I observed a relatively stable competitive landscape across most of the market. I think that we didn't observe anything very different. I think that's the multiple drivers driving. On the broader, there is a different that will be in different markets. Yeah, also different products we brought in different market in different places. For example, a market that we start Indonesia. So clearly Indonesia was the first country that grow much faster than other services in country like Thailand and Malaysia, et cetera. So this kind of countries were And the initial phase of those new markets clearly will grow faster than the market's been there for quite a period of time. Another example would be like Brazil. If you look at, it's actually our latest market when we launched many of our products. Brazil also in a pretty high growth phase as well. The other drivers on the product side as well, in most of the countries, we started with escalator, which is our consumption loans. You know, that's the first growth driver, and then later we roll out the cash loans, the personal cash loans of Shopee, and then the cash loan and of Shopee platform loans will be the growth driver. So if you look at the growth, on Shopee side, we still see more penetration possible on Shopee. And even within Accelerator, we have differentiated products for different users, especially for the more segment. we offer a differentiated product with longer tenures, slightly lower. So we still see opportunity to grow this segment. And for the off-platform item in the opening as well, for example, in some countries like in Malaysia, we see the off-shopping has been 30% of the overall portfolio already. And I think all this are... Regarding the margins, I think the margins influence quite a lot. by the country mix, product mix, and also whether we see a good opportunity to acquire users. I think it might fluctuate a little bit quarter to quarter. But the fundamental of this is how is our risk management capability that we see. We're seeing very stable risks. If you look at a particular product for a particular market, the risk is very stable for us. You can see this from our MPL. as well, and we track this very closely internally to make sure that we don't sort of like grow the loan book because we want to grow the loan book on the top line. We want to do it very prudently. At the same time, we actually upgrade our risk management models over the years, especially with many of the new AI technology we're experimenting with. the new risk model with the transformer structure as well to do a long-sequence data training built into our model to utilize many of the e-commerce data that we're not able to use in the traditional risk modeling. And it has been showing us very good performance. And so many of this will help us to manage our risks and to reach out to the user base we're not able to serve before so that we can grow the loan books over time.
Piyush Sudhari, HSBC (Analyst)
Next question comes from the line of Piyush Sudhari of HSBC. Your line is now open. Yeah, hi. Good evening. Thanks for the opportunity. First question is on Shopee. You have elaborated on various investment buckets. Could you also elaborate on how long these investment cycle could last in the context of how we should think about margins for 2027? And what are the likely deliverables from your partnership with Google to deepen AI-powered solutions for shopping? And second question is on Garena. Could you talk about the outlook for the booking growth in 2026, you know, pipeline for any IP collaborations that you can share? Thank you. For the investment cycle, as I shared earlier, I think for different initiatives, there are different investment cycles, and also for different markets, there are different investment cycles. So it's a little bit sort of like tricky to generalize it, I guess, from a top-down perspective. But I added in the opening that we do want to make sure, number one, that the total probability in the absolute number in 2026... is better than 2025. And also, if you look at the probability levels, I do believe that if you look at sort of like end of the year or over the years, I think it will not be worse than Q4 2025, and it should be able to grow over years. And if you look at... We're not providing guidance, let's say, for FY 2020. 7% yet, but as a medium-term to long-term trend, I think the 2% to 3%, even the margin, I think it's well achievable based on what we see so far. In a way, it's our choices on how much to draw on the margins versus the growth levers that we have in our hands from what we see. In terms of the partnership for Google, we are still in the process of developing the product. I think it shouldn't take too long, I believe. I think when we have the product ready, I think we'll be able to share with everyone. It's largely sort of working with Google for many years on Google Shopping and Google Ads and many other things on YouTube as well. So this is an extension of our partnership. Regarding the, at this moment, we still see the double-digit growth. It's actually a very high community. So we have time.
Alicia Yap, Citi (Analyst)
question comes from the line of Alicia Yap of Citi. Your line is now open. Hi. Good evening, management. Thanks for taking my questions. Two questions here. Number one, could management provide, you know, some insights into the retentions and also the renewal rate for your VIP member subscription program? And then, furthermore, if you can give us how does the VIP members influence the different purchasing frequencies and also the preferred product category? And also, are there any difference between the behavior in the customer profile across the different countries? And how does this affect your strategy? And then second question is on AI. So wonder to ask, you know, given like, you know, can management share with us on your investment priority, given, you know, how are you prioritizing your investment, you know, given, so how are you prioritizing investment between the e-commerce theme park? and AI amid the latest competitive environment and also the importance of the AI initiative. So if management can share how C are leveraging your synergies between your three core business to strengthen your competitive advantage and also to enhance your ecosystem value. Thank you. For the Shopee VIP program, it has been growing quite a lot over the past few months. In some countries, it has been more than 15% of our total GMBs for the VIP members. I think we do believe that this will grow further to double or triple from where we are right now. The retention has been pretty good, actually. The renew rate... So one of the core challenges historically for similar programs in our region is the payment success rate. When they roll from one month of spend to another, the many people drop off simply because there's no credit card. available for many of our users in our region versus if you look at the more credit card market. I think we solved this by working closely between Shopee and money to enable the smooth payment process for our VIP program. And as a result, our subscription rate has grown from 40% to 70% for Indonesia over the past... This is a big achievement for us in terms of how we can retain the VIP members on an ongoing basis. And for most of the VIP members, if you look at the average purchasing, we do see that much higher frequent purchase. and sometimes with the higher baskets as well. I think overall, if you look at the general number, the VIP member spends 30% to 40% more than the average. For different markets, actually, we see quite similar behaviors in different markets. I think probably the difference, I guess, in the market is probably the offerings, because there are different preferences in different markets in terms of user behaviors and what people care about. So we actually tailor the VIP offering quite customized tailor for each of the local market. I think that's probably more the difference than the other behaviors. The investments from businesses, our money businesses, it's a very popular businesses and for most of the new user growth or for most of the new initiatives, it comes with their quite positive customer lifecycle values. So it's kind of like... So in a way, every initiative has a positive ROI. I think if you look at the e-commerce side, we do spend quite a lot of effort on the AI. I think you mentioned about AI investment there. For the investment on the e-commerce for AI, we also look at the positive return of investment across the initiatives. For example, if you look at One of the areas we spend our effort on AI is our search recommendation and also ad systems. The uplift take rate is a consequence of many of our AI efforts. For example, how do we actually expand the description for our products so we can understand the product better? For example, how can we expand the queries from the users so we can understand user intention better? Recently, we also wrote out a multi-model search in our platform as well, so users can search a picture plus a long description, and we are able to serve that just similar to how Gemline, which HPD would do. I think all those AI investments have... We also effort using AI to help our sellers. For example, if you go to many of our countries, you can talk to the sellers with the help of AI already. We build an AI chatbot. Our sellers can customize it for their own purposes. This will help the seller to reduce manpower and also make it not only reduce cost, but also have a better upsell for the seller to create videos and typically come with a fairly positive return on investment. For the synergy across our businesses, clearly there is a lot of synergy between e-commerce and financial services. The financial services are essentially leveraging a lot of data. user behaviors from Shopee to be able to assess the users. And we still believe, as I said earlier on the previous questions, we still believe there's money to also for our banking businesses, insurance businesses, our payment business. Our payment, our money business also work with our game site to help the game on the payment process as well. That is a collaboration with gaming business from Shopee as well in terms of the...
Divya Dungahar, Morgan Stanley (Analyst)
merchandising in terms of the business side. So there are different types of collaboration among our businesses. Your next question comes from the line of Divya Dungahar of Morgan Stanley. Your line is now open. Thank you very much for the opportunity. My first question is on the Brazil space. Could you comment if you expect GMV growth in Brazil to accelerate this year, given all that we are doing on the fulfillment capability? And what kind of impact would that have on our AOVs? Are the AOVs still, you know, significantly lower or one-third of the market leader? And what kind of gap do you expect to be able to cover with this fulfillment uplift? Could you also comment on what the penetration levels for Shopee Pay later in Brazil are? And should that also see a significant uplift this year? So that's my first question on Brazil. And my second question is on the content ecosystem that you alluded to. Could you comment on where do you see the e-commerce content ecosystem plateauing in ASEAN specifically? And what are the unit economics now versus just e-commerce for us? And how is our market share trending in this? Thank you. For Brazil, we come with a pretty high growth rate in 2025. We do believe the growth will continue in 2026. We don't have a guidance for a particular country on the growth rate, but in general, we will see pretty good growth in the market. We also believe that we will outgrow the overall market in Brazil. On the AOVs, we do believe that the AOV will, over time, grow. The gap with Mali, I think it will still happen, but I think we will narrow down the gap over time. For the SPL later penetration in Brazil, it's still in a very early stage, honestly. I think we've grown quite a lot in Brazil. And the penetration in Brazil is still, I think essentially we start Brazil a lot later in other countries. And the penetration level in Brazil is still similar to the early time of what we observed in our early market. So we believe the trend will continue in terms of the penetration of SPL. in Brazil in 2026, similar to what we observed in other Asian markets. For the contents ecosystem, we don't think it's flattering yet for our platform. I wouldn't comment on the other platforms, but for our platform, we do believe there are further room to grow in the coming quarters. The euthanomics has been improving over years. I mean, sometimes there's a slight fluctuation from month to month, but general direction is the euthanomics...
Operator (Operator)
I think the gap between geoeconomics, it will be narrow over time, will not be too much different. Thank you. This concludes our question and answer session. I would like to turn the conference back to Mr. Elson Choi for any closing remarks. Thank you all for joining today's call. We look forward to speaking to all of you again next quarter. Thank you for attending today's call. You may now disconnect. Goodbye.
Other transcripts: Q1 FY26 transcript · Q2 FY25 transcript
All SE earnings · Back to SE overview
Transcript produced by Signals.AI from the company's own earnings call audio; speech recognition can mishear a word. Not personalized investment advice.