Southeast Asian e-commerce giant Sea (SE.US) Q3 profit misses expectations as increased AI and cloud investments weigh on margins.

Southeast Asian e-commerce giant Sea (SE.US) reported Q3 2026 results before the U.S. market opened on Tuesday: revenue beat market expectations, but adjusted EBITDA fell short. The company ramped up AI and cloud technology investments to fend off intense competition, weighing on profit margins. Following the results, Sea's shares fell 7% in premarket trading. The earnings report showed Sea's Q3 revenue was US$8.582 billion, up 43.4% year-over-year, above market expectations; gross profit was US$3.935 billion, up 51.4% year-over-year; net profit was US$502 million, up 34.0% year-over-year; diluted earnings per share were US$0.78. Adjusted EBITDA was US$931 million, up 28.9% year-over-year, but below the analyst average estimate of US$990 million. Three major businesses: Shopee and Garena grow steadily, Monee's margins under pressure E-commerce unit Shopee's total revenue was US$6.070 billion, up 41.3% year-over-year. Of this, core marketplace revenue (transaction commissions and advertising) was US$4.6 billion, up 50.6%; GMV was US$39.7 billion, up 23.3%; order volume was 4.5 billion orders, up 25.5%. Adjusted EBITDA was US$269 million, up 44.7%. It is understood that intense competition is pressuring its prices and margins; meanwhile, spending is also rising as the company embeds AI features and moves to launch a cloud business. Digital financial services unit Monee's revenue was US$1.622 billion, up 63.9% year-over-year; consumer and SME loan balances were US$12.6 billion, up 60.0%. But adjusted EBITDA grew only 15.5% to US$298 million; the 90-day-plus non-performing loan ratio rose from 1.1% to 1.3%. Sea is considering an IPO spinoff of its financial services unit Monee. Analysts including Lea El-Hage noted that the move would give Monee an independent financing channel, but its margins remain fragile. Gaming unit Garena's revenue was US$840 million, up 28.6% year-over-year; bookings were US$890 million, up 5.9%; adjusted EBITDA was US$458 million, up 45.9%; quarterly paying users were 68.6 million, up 4.1%. AI expansion drives up spending, market questions return prospects On shareholder returns, the company has repurchased 11.1 million shares under its US$1 billion buyback program for US$997.2 million, nearing completion; on November 9 the board approved an additional US$1 billion buyback authorization with no expiration date. As of the end of September, the company had US$2.905 billion in cash and equivalents and US$5.113 billion in short-term investments. As of Monday, Sea's shares had fallen about 40% year-to-date, weighed down by rising oil prices and intense competition. CEO Forrest Li plans to offer cloud services to enterprises globally, a plan that sent the stock lower in October, when analysts noted the company did not explain how it would build the new business or how much it would invest. Analysts including Lea El-Hage noted that the AI-driven expansion will put Sea on the same stage as well-funded cloud service providers such as Amazon.com, Inc.'s AWS; but Sea is unlikely to operate at the same scale as these established rivals, because before achieving profitability the company needs to invest heavily in resources such as chips and storage. In addition, Sea is seeking to expand beyond its home regionextending Shopee's retail footprint to Brazil while navigating potential regulatory hurdles in major regional markets such as Indonesia.