Maybank Investment Bank has revised up Singapore technology firm Sea‘s revenue/adjust earnings before interest, taxes, depreciation, and amortization (EBITDA) forecasts for FY25-27 by 6 percent to 8 percent following its strong first quarter.

The research house said in a note on Wednesday that Sea’s first quarter adjusted EBITDA of $947 million was up 2.5 times year on year and 60 percent quarter on quarter, 29 percent ahead of its forecast and 44 percent above street forecast.

According to Maybank, besides under-penetration led structural growth drivers and benign competition, Sea’s first quarter was particularly helped by Chinese New Year and Lebaran seasonality, particularly the gaming business.

It is noted that Sea’s Garena bookings rose 51 percent year on year/43 percent quarter on quarter – 35 percent ahead of Maybank/street expectations.

Meanwhile, Sea’s e-commerce gross merchandise value (GMV) grew 21 percent year on year/flat quarter on quarter, broadly in line with expectations, but the bigger surprise came with the adjusted EBITDA delta of $286 million year on year, up 74 percent quarter on quarter – a massive 69 percent above street expectations.

Its seller take rate increases with ad penetration and first quarter seasonality leading to lower sales and marketing (S&M) spending allowed for margin expansion, which management expects to partially reverse in the coming quarters.

The firm’s digital financial services business, on the maintained its strong momentum, up 58 percent year on year/7 percent quarter on quarter, 4 percent to 7 percent ahead of expectations.

“We expect e-commerce GMV and Garena bookings to decline 2 percent and 20 percent quarter on quarter (in the second quarter), but on a year on year basis still grow at 20 percent and 15 percent year on year respectively – along its full-year guidance,” said Maybank.

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