Sea (Southeast USA) FY26Q1 conference call: Shopee Q1 GMV growth of 30%, full year guidance at 25%

Recently, Sea (SE.US) held a financial report conference call for FY26Q1. The company indicated that Shopee Q1 GMV increased by 30%, orders grew by 29%, with growth coming from both Brazil and Southeast Asia. Looking ahead, the guidance for 2026 is a 25% growth with full-year EBITDA not lower than last year. In the medium to long term, the company will continue to adhere to the 2%-3% EBITDA margin target. In terms of financial performance, total revenue for Q1 was 7.1 billion USD (+47% YoY), adjusted EBITDA crossed 1 billion USD for the first time (+9% YoY), and net profit was 438 million USD (+7% YoY). Brazil led the market in growth in Q1, gaining a larger market share and driving down service costs at a larger scale. Brazil has been profitable for several quarters in a row, and the company does not expect this trend to change. The company plans to continue healthy growth in Brazil while maintaining current profit levels. The company will continue to invest in Brazil, especially in the ongoing construction of fulfillment networks, expanding same-day delivery, and the VIP program. Regarding the fulfillment business in Brazil, Sea pointed out that it is still in the early stages of development due to its late start. The company is not overbuilding - capacity utilization is relatively high because they can predict fulfillment order volumes well in advance and build accordingly on schedule. Therefore, there is unlikely to be a situation where there is a rush of construction this year, followed by a pause next year to digest capacity. It will be a continuous, steady construction process. The ultimate goal is for the absolute processing capacity of fulfillment centers to exceed that of major market competitors, but given the late start, this will take a few years. In terms of return on investment for individual fulfillment centers, because the company leases operations instead of owning warehouses, the capital expenditure is primarily on equipment, resulting in a relatively quick investment return. The company mentioned that rising oil prices do have an impact on direct costs, but they believe they can absorb the impact within the existing guidance range. The cost impact in Q2 may be larger than in Q1. Additionally, rising oil prices may weaken the purchasing power of consumers in some countries. However, the impact on the platform is mild, as the platform is fundamentally the cheapest shopping channel, selling essential daily goods. When consumers need to save money, they are more likely to come to the platform. If there is any specific section that you would like me to translate, please let me know.