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Sea Limited (SE +19%) is trading sharply higher today after reporting its Q2 results this morning. Despite falling short of EPS expectations, the Southeast Asia e-commerce, gaming and financial services giant continues to improve its profitability. EPS soared 364% yr/yr to $0.65. Gross profit of $2.4 bln and net income of $414.2 mln were up 52% and 418% yr/yr, respectively. Revenue increased a healthy 38.2% yr/yr to $5.3 bln, coming in well above analyst expectations. It's also its strongest growth in 12 quarters.

• Starting with its e-commerce segment, Shopee delivered another record breaking quarter following a strong Q1, with sequential growth in gross order volume, gross merchandise volume (GMV) and revenue. Gross orders, GMV, and revenue had yr/yr increases of 29% to $3.3 bln, 28% to $29.8 bln, and 34% to $3.8 bln, respectively. This is a nice acceleration from Q1 growth rates of 20%, 22%, and 30%. E-commerce adjusted EBITDA was $228 mln compared to a $(9) mln loss in the year-ago quarter.
• Its Digital Financial Services saw revenue jump 70% yr/yr to $883 mln. Revenue growth for this segment has been impressive and accelerating in recent quarters, with yr/yr increases of 30% in Q4 and 58% in Q1. Adjusted EBITDA was up 55% yr/yr to $255 mln. Its consumer and SME loans principal outstanding reached $6.9 bln, up over 90% yr/yr. Notably, active users for its consumer and SME loan products exceeded 13 mln for the first time, representing more than 45% yr/yr growth. Encouragingly, its 90-day nonperforming loan ratio remained stable at 1%.
• Now to its Digital Entertainment segment, which saw revenue increase 28% yr/yr to $559 mln. Bookings were also healthy at 23% yr/yr growth to $661 mln. The growth was primarily driven by the increase in its active user base as well as deepened paid user penetration. Specifically, Free Fire continues to be at the core of this segment's performance, with over 100 mln average daily users. Management believes Free Fire has established itself as an "evergreen" franchise.
• While SE does not typically provide guidance, the company is optimistic and more confident for the 2H25. In particular, it expects Shopee's GMV momentum, which grew 25% yr/yr in 1H25, to continue into Q3. Additionally, it raised its FY25 digital entertainment bookings growth to over 30% yr/yr from "double-digit" growth.

Overall, this was an impressive quarter for SE, highlighted by its strongest top-line growth in 12 quarters and improved profitability. Its e-commerce and digital financial services segments showed notable acceleration, which is nice to see despite some macro volatility. Additionally, investors seem pleased with the company's commentary around the 2H25, particularly the raised guidance for digital entertainment bookings growth. On a final note, the stock continues its strong streak of impressive quarterly reports, marking the third consecutive quarter that SE has seen a notable jump following earnings.