Revenue: $955M v $921M est. (+24% YoY, 19% Constant Currency)

EBITDA: $154M v $142M est. (+46% YoY)

EPS: $0.04 v $0.02 est.

Selected Key Metrics

• On-Demand GMV: $6,131M (+24% YoY)

• On-Demand GMV per MTU: $130 (+4% YoY)

• Group MTUs: 51.6M (+16% YoY)

• Loan Portfolio: $1,438M (+130% YoY)

• Adjusted EBITDA: $154M (+46% YoY)

• Adjusted Free Cash Flow: $76M (+10% YoY)

Grab’s earnings for the quarter beat expectations on both top and bottom-line. This was quite surprising considering Q1 was expected to be a weak quarter due to fuel price spikes related to the Strait of Hormuz crisis.

Interestingly, it was not a case of deliveries/financial services cushioning the fall in mobility. The mobility business remained extremely strong, with volumes in April up 32% YoY despite the increased fuel prices.

In this piece, I will break down the earnings in full, highlight key points on management commentary during the call and discuss my personal thoughts in the last section.

Table of Contents

1. Deliveries & Mobility

2. GFin, Financial Services

3. Key Call Commentary

4. Positives & Negatives

5. Conclusion

1. Deliveries & Mobility

Deliveries is Grab’s largest segment by GMV and Revenue.

GMV grew 24% YoY (or 22% on a constant currency basis). Adj. EBITDA margin also grew from 2.0% to 2.3%, tracking closer towards management’s long-term target of 4+% margins.

This growth has been attributed to higher contributions from advertising and gains in operating leverage. Segment Adjusted EBITDA was up 40% YoY as a result.

Mobility GMV grew 23% YoY (or 19% YoY on a constant currency basis). Revenue growth was slower at 19% YoY (or 15% YoY on a CC basis) due to the continued focus on affordability.

Segment Adj. EBITDA continued expanding from 8.8% to 8.9%. This is more or less the steady state margin target that management has issued for mobility (9+%).

2. GFin, Financial Services

This quarter was yet again very strong for GFin, following on from last quarter. The net loan portfolio reached $1.44B, up from $1.18B just last quarter. That represents 22% QOQ growth and 130% YoY growth.

Management has set a FY2026 target of $2B, that appears to be a rather low bar considering the current numbers. Segment Adj. EBITDA margin improved from -41.1% to -15.71%. Grab tracks closer towards profitability, which it expects in the 2nd half of this year.

Customer deposits across GXS Singapore and GXBank Malaysia remained relatively stable at $1.63B.

As I’ve discussed in the past, I believe Grab has the potential to grow much faster than ~40%. For instance, Sea has 10x the loan book but is growing faster. Grab’s recent launch of cash loans for consumer could help spur this.

3. Key Call Commentary

Again, Grab hosted a live video earnings call with an IR head taking charge of questions.

On New Product Innovations

“Product innovations we have made have really targeted affordability and reliability. Group orders, for example, has GMV up 74% year-on-year, and we launched group rides at GrabX last month, which is a similar concept for sharing rides to reduce pricing for individual consumers. And that’s now available across all 6 of our core markets. GrabUnlimited, of course, is very good value for high-frequency customers, and it continues to account for 1/3 of our deliveries GMV. So all of these are highly affordable products, which keep the demand strong even when consumers are stretched.”

On Fuel Crisis

“We’re monitoring the fuel situation extremely closely. And of course, we will not hesitate to act further if needed. In the medium term, we are committed to accelerate the EV transition to reduce our driver partners exposure to fuel price volatility.

So for example, in Thailand and Philippines, we have a drive-to-own program that connects our drivers with OEMs like BYD and GAC, where we have deals of up to 70,000 vehicles available across 6 markets with accessing to financing so they can own those more easily. In Vietnam, we have secured preferential charging rates also through our charging network partners, EBOOST and Charge+, which helps our drivers in the transition also. And finally, in Thailand, I am pleased to say that our total fleet supply has crossed 30,000 EVs on the platform and demand for those from consumers is also strong, where they can select that EV option, and that demand has grown by over 35% year-on-year.

So this fuel crisis has become an opportunity in the sense that it helps us to accelerate that EV transition.”

On Indonesia’s 8% Commission Cap

“The recent announcements are explicitly focused on Ojek drivers, who are our 2-wheel ride hailing partners. The 4-wheel drivers earn well above the minimum wage, so we believe they're less of a concern for regulators in Indonesia.

That said, of course, we're engaging very proactively with the relevant ministries to try to seek absolutely clarity and the technical aspects of how the decree will be implemented.

It's worth noting that 2-wheel mobility, that the decree referred to in Indonesia, is less than 6% of our total mobility GMV. So we are, therefore, reiterating our expectations for mobility margins to stabilise within that historical range and not to go outside of that range."

On GrabMart

“GrabMart is an exciting segment. The TAM is very large, arguably larger than food delivery altogether. So we are doing a lot to accelerate the product innovation particularly the front end, the AI-powered shopping agent, which we think will transform the ease with which consumers can, for example, create a weekly shopping basket and then improve the targeting for Grab more cross-sell as well.

And by the way, GrabMore grew more than double-digits quarter-on-quarter. Overall, as a result, the grocery MTUs are growing at 2.6x the rate of food MTU growth on a year-on-year basis. So that shows you that it’s really expanding the top of our funnel, which is extra important in the age of AI in terms of generating data and deepening the long-term value relationships that we have with our consumers.

And then the order frequency that we saw were 1.8x higher than the food-only users, which illustrates that long-term value enhancement that I was speaking about. So over the long term, the North Star is very clear. We’ve got global peers, who have achieved like 20% to 40% mart penetration as a percentage of their deliveries business overall. So it’s definitely the right model that we’re pursuing.”

On Grab’s Loan Book

“We actually don’t have any issue at all in raising deposits. We’ve been really gratified at the trust that consumers have in the Grab brand, the Grab ecosystem, our capabilities to protect their money. And if you look at the pricing of our deposits, we are never the most aggressive in the market. We’re able to actually gather sufficient deposits to create the right shape of balance sheet. So there’s no point having excess deposits, particularly in this yield curve environment. So what you’re seeing is that’s carefully managing the level of deposits to make sure that we optimise for P&L purposes. If we needed to raise more deposits, we’re very confident that we can do that.”

4. Positives & Negatives

Positives:

1. Growth accelerated despite seasonality and fuel price concerns

Coming into earnings, one of the biggest worries was the increase in fuel prices that would affect demand across the region. Yet, transport volumes were up +32% YoY in April.

GMV also came in much stronger than expected which led to a beat in top-line expectations.

2. Operating leverage in action

Grab’s Adj. EBITDA margin increased from 13.7% to 16.2% YoY, which combined with GMV increasing 24% YoY led to a 46% increase in Adj. EBITDA.

This is classic operating leverage in action, and I believe we will start to see this increase exponentially in the months and years to come, especially as GFin turns profitable in H2 2026.

3. Advertising is becoming a real profit lever

GrabAds is becoming a core profit driver for the business. Average spend of quarterly active advertisers on Grab’s self-serve platform had average spends grow 44% YoY.

GrabAds is vital for Grab because it can lift delivery margins without hurting consumers or drivers. It is similar to how advertising improved the economics of other marketplace businesses. (Think Amazon, DoorDash, Meituan)

4. New product innovations are contributing to top and bottom line growth

Group orders for instance, grew by 74% YoY and has contributed significantly to deliveries growth. I discussed my take on new product innovations that were announced at Grab’s 2026 product day.

5. The initial reaction to the 8% commission cap appears to be overblown

Grab discussed during the earnings call that it was only applicable to 2-wheelers, which represented just 6% of total mobility GMV. Using FY2025 numbers, and assuming a 12pp cut in take-rates, it would result in a $57M drop in annualised revenue or 1.7% haircut on the group’s top-line.

Negatives:

1. Partner Incentives

It is never good to see partner incentives up 54% YoY. In this case, it was a necessary action to an unexpected event. In time, this will moderate, but it certainly affected the bottom-line, which led to a QoQ fall in net income.

2. Fuel costs are likely to remain a headwind

Management repeatedly referred to elevated fuel costs and the regional fuel crisis. Grab is supporting drivers through fuel discounts, cashback, EV transition initiatives, and government subsidy coordination.

The risk is that if fuel costs stay high, Grab may eventually have to choose between three bad options: subsidise drivers more, raise consumer prices, or accept weaker supply. None are great for margins.

3. Indonesia commission regulation sets a precedent and potential spillover effect

As I discussed in this piece, the worry of Indonesia’s policy, is that drivers in other Southeast Asian countries may push for similar caps. If it spreads to Malaysia, Thailand, Vietnam, Philippines, or Singapore in modified form, the valuation impact could be much larger.

4. GFin growth could be faster

Again, I believe Grab should be much more aggressive in growing its Financial Services business. It has to be a core growth driver that brings the group’s revenue growth closer to 30% as Monee is doing for Sea.

Grab’s management ultimately remains relatively conservative which is one of the largest drawbacks. I believe they do have shareholders’ interest at heart and are long-term thinkers, but to succeed and stake a strong claim on the financial services segment in the region, I do think they have to be more aggressive.

5. Conclusion

Overall, this was a very strong quarter for the business amidst challenges that they couldn’t anticipate or prepare for. Grab stock is down over 25% YTD due to concerns over fuel prices and general weakness in emerging markets.

This quarter has put to bed many of these concerns.

That said, fuel will continue to be a headwind for the foreseeable future.

While fuel will continue to be a headwind for the foreseeable future, it is ultimately a short-term issue and will mean less to Grab as it transitions to EVs and AVs over the long-term. I remain optimistic and positive on Grab at these prices as I have reiterated many times.

Please feel free to read my 2026 thesis to understand why:

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Just yesterday, I released my Circle Deep Dive which I would recommend checking out if you are interested!

Disclaimer: The content presented in this thesis is for informational and academic purposes only and does not constitute financial advice. The analysis and opinions expressed are based on research and should not be interpreted as a recommendation to buy, sell, or hold any security. Readers should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.

Circle is undoubtedly the best public market proxy on stablecoins today. Its flagship product, USDC, is a fully reserved digital dollar that circulates across 30+ blockchain networks, effectively a protocol for dollars on the Internet.

At the end of 2025, there was $75.3 billion USDC in circulation (up 72% YoY), with on-chain transaction volume hitting nearly $12 trillion in Q4 alone (247% YoY growth).

While ~95% of Circle’s revenues today are derived from USDC, the business is diversifying its revenue streams into other areas such as Circle Payments Network, Arc, wallet infrastructure, developer services, tokenised money market products, and enterprise settlement tools.

In this piece (11,700 words), we will discuss Circle’s history, its value proposition, moat, future prospects and what I personally think of it as an investment.

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Table of Contents

1. Company History

2. Value Proposition

3. Business Model

4. Product Offerings

5. Moats & Differentiation

6. Market Context & Industry Positioning

7. Competitive Landscape

8. Financials

9. Ownership & Management

10. Valuation

11. Catalysts & Outlook

12. Bull and Bear Case

13. GabGrowth Quality Score

14. Concluding Thoughts (What I am personally doing)

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1. Company History

Origins and Vision (2013-2016)

Circle was founded in October 2013 by Jeremy Allaire and Sean Neville in Boston, Massachusetts, with $9 million in seed funding from Jim Breyer, Accel Partners and General Catalyst.

Allaire was already a serial internet entrepreneur. He'd co-founded Macromedia (maker of Flash) and had a front-row seat to the web, mobile, and cloud platform shifts. He also founded Brightcove in 2004, which became a major online video platform for media companies and brands, helping businesses publish and distribute video on the internet before YouTube and streaming became as dominant as they are today.

When Bitcoin emerged, he viewed it as a potential protocol for value on the internet, analogous to HTTP for information or SMTP for email.

Allaire believed that blockchain technology would eventually allow fully reserved dollars to move on the internet in an open, interoperable way, which would drive the cost of storing and moving value down to effectively zero.

However, in 2013, none of the conditions for that vision existed. Blockchain infrastructure was primitive, regulators was non-existent and banks wouldn't touch it. Consumers certainly weren't asking for internet-native money, or understood it at the time.

Therefore, Circle started with what was available, creating a consumer Bitcoin payment app called Circle Pay. The product let users buy, hold, and send Bitcoin and fiat currencies through a simple mobile interface. It was essentially a Venmo for crypto, and with Allaire’s credibility, Goldman Sachs led a $50M funding round alongside IDG Capital Partners.

In September 2015, Circle became the first company to receive New York's BitLicense, the state's newly created framework for virtual currency businesses. In April 2016, it became the first firm to receive virtual currency licensure from the British government. While competitors were moving fast and breaking things, Circle was collecting licenses. At the time, this was seen as a slow move, but looking back, was probably one of the most decisive moves.

By late 2016, Circle stopped supporting Bitcoin exchange functionality in its consumer app entirely. The company stated it was "now more than ever not a consumer bitcoin exchange" and would focus on global payments and "next-generation blockchain technology." It was the first clear signal that Allaire was pivoting toward what would become USDC.

Pivot & Costly Mistakes (2017-2019)

The next phase of Circle's history is messy, costly, and absolutely critical to understanding the company today.

In February 2018, riding the crypto bull market, Circle acquired Poloniex, one of the largest cryptocurrency exchanges at the time for $400 million. The logic was to build a broad digital asset marketplace. Circle simultaneously raised $110 million in a Series E led by Bitmain (the Chinese mining giant) at a nearly $3 billion valuation. The company was applying for banking and securities licences, envisioning itself as a regulated crypto-financial conglomerate.

However, the 2018 crypto winter crushed trading volumes. Poloniex's ranking plummeted. The SEC began investigating tokens traded on the exchange. Circle found itself managing a regulatory minefield that distracted from its core vision. By October 2019, Circle sold Poloniex (just 18 months after buying it) at an estimated $156 million loss. It subsequently sold its Circle Trade OTC business to Kraken and its Circle Invest retail trading app to Voyager Digital.

Circle made bad mistakes and these were expensive lessons, but by stripping away all their non-core business lines, Circle was left with one product, which embodied its founding vision: USDC.

USDC had launched quietly in September 2018, co-created through the Centre Consortium, a joint venture between Circle and Coinbase. Each USDC token was fully backed by U.S. dollar reserves, issued on the Ethereum blockchain, and designed to be the kind of boring, transparent, fully reserved digital dollar that institutions could eventually trust. In its first few months, over 100 crypto-focused businesses adopted USDC, but it was still tiny, mostly a niche settlement tool for the digital asset ecosystem.

COVID Growth and the SPAC Era (2020-2022)

COVID-19 was an accelerant for digital dollars just as it was for digital commerce. As the world moved online, demand for on-chain settlement surged. USDC circulation grew from roughly $4 billion at the start of 2021 to $52.5 billion by early 2022, a staggering 13x increase in barely a year. Circle went from interesting niche player to systemically important infrastructure almost overnight. Its market share surged during this period to as high as 35%.

In July 2021, Circle announced plans to go public via a SPAC merger with Concord Acquisition Corp, initially valued at $4.5 billion. By February 2022, with USDC's circulation having more than doubled since the deal was announced, the terms were renegotiated to $9 billion.

Then the crypto industry imploded. Terra/Luna collapsed in May 2022, wiping out over $60 billion. Celsius and Three Arrows Capital failed. FTX, once valued at $32 billion, went to zero in November 2022. The SEC, understandably spooked, delayed qualification of Circle's SPAC filing. In December 2022, Circle and Concord mutually terminated the merger agreement.

The path to public markets was dead. But the worst was yet to come. On March 10, 2023, Silicon Valley Bank collapsed. Circle disclosed that $3.3 billion of USDC's cash reserves, roughly 8% of the total backing, were trapped at the failed bank. USDC immediately broke its dollar peg, plunging to $0.87 over the weekend. In a single week, investors redeemed a net $6 billion out of USDC.

This was an existential moment. Had the FDIC not backstopped SVB deposits that Sunday night, Circle could have faced a permanent shortfall in its reserves. The peg recovered within days once the government guarantee was announced, but the damage to market confidence was severe. USDC circulation, which had already been declining from its $55 billion peak, continued falling to a low of roughly $24 billion by late 2023. Tether, which had no direct U.S. banking exposure, surged to over 70% stablecoin market share.

The SVB episode is essential context for understanding Circle today. It exposed a genuine vulnerability (counterparty risk in reserve custody) that Circle has since addressed by shifting the vast majority of reserves into short-term U.S. Treasuries managed by BlackRock.

However, it also demonstrated something important about the network. Even after the worst stress test imaginable, USDC didn't die. It de-pegged, bled assets, and then stabilised and began rebuilding. It proved the stickiness of the underlying network effects and that it had true resilience.

Refocusing, IPO, Platform Expansion (2023-Now)

The 2023-2024 period was Circle's rebuilding phase. The company cut staff, discontinued non-core investments like SeedInvest (sold to StartEngine), and narrowed its entire focus to stablecoin infrastructure. Revenue remained strong during this period driven by high interest rates on the reserve portfolio ($1.45B in 2023 and $1.68B in 2024). Circle started generating real profits from what was now a clean, focused business.

In April 2025, Circle filed its S-1 for a traditional IPO. By June 2025, the company listed on the NYSE under the ticker CRCL. After years of false starts and near-death experiences, Circle was finally public.

Circle stock was priced at $31 per share but was heavily oversubscribed and eventually opened at $69, closing the day at $83. In the subsequent few weeks, Circle traded as high as $289.99, an incredible 4.2x from the opening price. Circle has since been in a significant drawdown as crypto experiences a bear market again, falling to as low as $50 in February this year.

Today, the core layer remains USDC, which by year-end 2025 had rebounded to $75.3 billion in circulation, up 72% year-over-year, with nearly $12 trillion in on-chain transaction volume in Q4 alone. Circle also issues EURC (the largest regulated euro stablecoin at €310 million) and acquired Hashnote to gain USYC, a tokenised money market fund that grew to roughly $1.7 billion.

Below that, Circle launched Arc in Q4 2025, a new Layer 1 blockchain designed as an economic operating system for regulated financial activity, with over 100 major companies in its testnet including Goldman Sachs, Deutsche Bank, Visa, and Mastercard. Arc is pre-revenue and pre-mainnet. It's a bet on the future, not a contributor to today's financials.

Above the core, Circle built Circle Payments Network (CPN), an application layer for cross-border money movement. By February 2026, CPN had 55 financial institutions enrolled, $5.7 billion in annualised volume, and was live in 14 markets with 11 more planned. It also launched StableFX in production beta for on-chain foreign exchange.

The evolution from Bitcoin wallet to crypto exchange to stablecoin issuer to full-stack internet financial platform is what I believe most investors miss when they look at Circle's simple-looking P&L. The 13 years of regulatory groundwork, painful pivots, and infrastructure investment have formed the foundation of the business, and is the moat today.

2. Value Proposition

Before we start with Circle’s value proposition, it is important to discuss the value proposition of stablecoins and how they work, as it is crucially important to the Circle thesis.

Moving money on the internet is still shockingly slow. A wire transfer takes 1 to 3 business days. It costs $25 to $50. Cross-border is even worse due to correspondent banks, FX spreads, compliance checks, and 3 to 5 day settlement windows. The system runs on bank hours which closes on weekends and this hasn't meaningfully improved in decades.

Stablecoins close that gap. A stablecoin is a digital token on a blockchain, pegged 1:1 to a real currency like the US dollar. For every token in circulation, there's a matching dollar sitting in reserve, typically held in cash and short-term US Treasuries. You can think of it as a dollar that lives natively on the internet.

When you send a stablecoin from Singapore to Argentina at 2am on a Sunday, it settles in seconds, costs fractions of a cent with no banks in the middle. There is no waiting for business hours and the blockchain is the settlement layer which never closes.

This matters for 3 reasons:

1. Speed and Cost. Stablecoins do what the traditional banking system does, but faster and cheaper. A cross-border payment that used to take days and cost tens of dollars now takes seconds and costs nearly nothing. For businesses moving money globally, this is a step change improvement.

2. Access. Most of the world doesn't have easy access to dollar-denominated savings or payments. In countries with high inflation, capital controls, or weak banking infrastructure, a dollar-pegged stablecoin on a phone is transformative as it acts as a savings account, a remittance rail, and a payment method in one.

3. Programmability. Unlike a dollar in a bank account, a stablecoin can be programmed. For instance, it can be held in escrow and released automatically when goods are delivered. It can also be streamed as payroll by the second or used as collateral in lending protocols.

The stablecoin market is around $320 billion today, with projections to reach trillions of dollars in a few years. Transaction volumes could hit $100 to $200 trillion annually, while Visa and Mastercard are already integrating stablecoin settlement. Stablecoins are a game changer and have a very enticing value proposition.

Circle's value proposition is fundamentally different from most FinTech companies because it doesn't serve end consumers directly. Instead, it is infrastructure that enables services to be built on top of it. This distinction matters enormously for understanding who Circle actually creates value for and why the network keeps growing without Circle needing to acquire every user itself.

For Developers and Technology Companies:

If you're building any product or service that needs to move, store, or programme dollars on the internet, USDC is essentially the default choice. It operates across 32 blockchain networks, more than any other stablecoin, making it the most portable and interoperable digital dollar available. Circle provides SDKs, APIs, smart contract templates, and programmable wallets that allow developers to embed dollar-denominated financial functionality into their products without needing to build banking infrastructure from scratch.

This is a massive unlock. A startup in Southeast Asia building a remittance app doesn't need to negotiate with correspondent banks, obtain money transmission licences in every jurisdiction, or build settlement infrastructure. They can integrate USDC and plug into a globally available, near-instant, near-free payment rail that already has deep liquidity. The same applies to AI developers who need their agents to make and receive micro-payments, e-commerce platforms that want to offer stablecoin checkout, or capital markets firms building tokenised products that need a cash settlement layer.

Importantly, most of these integrations happen without any commercial relationship with Circle. Tens of thousands of products and services use USDC today, and the vast majority simply build on the open protocol. This organic, developer-driven adoption is what creates the utility network effect and makes USDC’s position so hard to displace.

For Financial Institutions:

This is the cohort that I believe will drive the next phase of Circle's growth, and where the value proposition is most compelling relative to the legacy system.

To understand this, we have to give an analogy of what cross-border money movement looks like today. A business in Portugal sending payment to a supplier in Brazil goes through multiple correspondent banks, each taking a cut, with settlement that can take days, requires pre-funded nostro/vostro accounts, and involves significant FX spread on top.

The capital tied up in these intermediary positions is enormous. For instance, JPMorgan alone moves north of $10 trillion per day in gross money settlement.

Stablecoins collapse this entire chain as settlement happens in seconds. There's no pre-funding requirement because the value moves atomically. The capital efficiency gain is what’s driving major institutions to Circle’s doorstep. Firms like Fiserv, FIS, Corpay, and Matera, infrastructure providers that serve tens of thousands of banks, have all announced integrations with Circle's technology. Visa and Mastercard have launched products around USDC settlement. Even G-SIBs are leaning in to improve their own international money movement using stablecoin rails.

What Circle offers these institutions is not just the stablecoin itself, but the trust infrastructure around it. Circle holds regulatory licenses across 49 U.S. states plus dozens of international jurisdictions. It also has elite reserve transparency (BlackRock-managed Treasuries, audited monthly) and conditional approval for a National Trust Bank charter. No other stablecoin issuer comes close on this dimension.

For Enterprises and Corporates:

Large enterprises that operate across geographies face constant friction in treasury management, collecting revenue in multiple currencies, repatriating funds, managing FX exposure, dealing with settlement windows and bank cut-off times. USDC offers a way to unify treasury operations onto a single, programmable rail. We're seeing adoption from firms like Brex, Deel, and Gusto for payroll and corporate payments, and from companies that want to move money across subsidiaries without waiting for SWIFT to process.

For Dollar-Hungry Populations:

This is perhaps the most under-appreciated use case. In countries with high inflation, capital controls, or unstable banking systems, holding dollars is not really an investment, but a priority for survival. USDC provides a way for individuals and businesses in these markets to access, hold, and transact in dollars without needing a U.S. bank account.

Allaire has spoken about this as a continuation of American monetary policy goals. For instance, the GENIUS Act itself was partly motivated by the strategic value of extending dollar reach globally through digital means.

3. Business Model

At a high level, Circle's business model today is very simple. The target is to grow the amount of USDC in circulation, earn yield on the reserve assets backing it, and re-investing a portion of that yield into distribution partnerships and platform expansion to grow circulation further. A perfect flywheel.

However, it isn’t that simple of course. There are important nuances around distribution economics, margin structure, and the emerging revenue lines that will determine whether Circle can evolve from a one-dimensional reserve income business into a multi-revenue platform.

Reserve Income (The Core Engine)

Circle holds cash-equivalent assets, primarily short-term US treasuries and repurchase agreements managed by BlackRock to back every USDC in circulation. It earns the prevailing short-term interest rate on these reserves. In Q4 2025, the reserve return rate was 3.81%, down 68 basis points year-over-year as SOFR declined.

This is the business in its simplest form. More USDC in circulation x the risk-free rate = more revenue. In Q4 2025, total revenue and reserve income was $770 million, up 77% year-over-year, driven overwhelmingly by the growth in average USDC circulation (which ended the year at $75.3 billion, up 72% YoY) partially offset by the lower reserve rate.

The obvious bull case here is volume growth. Circle's own internal model assumes a 40% CAGR in USDC circulation, which they describe as their "conservative" base case. Third-party research CAGRs range from 25% at the low end to 90%+ at the high end, with a median around 60%.

The equally obvious risk is interest rate sensitivity. If the Fed cuts aggressively and short-term rates fall to, say, 2%, Circle's revenue per dollar of USDC roughly halves. This is the single biggest vulnerability in the current model and the reason why diversifying into non-rate-dependent revenue is strategically critical.

Distribution Costs (The Coinbase Question)

This is where the P&L gets complicated and where I think most investors should spend their time.

Circle doesn't acquire most of its USDC circulation directly. It grows distribution through partnerships with exchanges, wallets, neobanks, payment companies, and other financial institutions. Many of these partnerships involve revenue-sharing arrangements where Circle pays a portion of reserve income to the partner as an incentive to hold and distribute USDC on their platform.

The largest and most scrutinised of these is the Coinbase relationship. Coinbase took an equity stake in Circle and is the co-creator of the original Centre Consortium. Under their agreement, Coinbase receives a share of reserve income on USDC held on its platform. As Coinbase holds a significant portion of total USDC circulation, this is a material cost line. In Q4 2025, total distribution, transaction, and other costs were $461 million (roughly 60% of gross revenue).

The resulting metric that matters is RLDC margin (Revenue Less Distribution Costs). In Q4 2025, RLDC margin was 40.1%, up modestly quarter-over-quarter. For FY 2025, RLDC margin was 39.4%, exceeding the company's guidance of approximately 38%.

There are two ways to think about this. The bear case and the bull case.

The bear case is that RLDC margins stay compressed or get worse as Circle has to pay more partners to drive growth, essentially giving away the economics to grow a network it doesn't fully control. This is a structural disadvantage that Circle faces due to its position of dependency.

The bull case is that three tailwinds provide structural support to RLDC margin over time. First, growing network effects mean that as USDC becomes more dominant, new partners integrate it organically without needing incentive deals. Many products are built and launched using USDC without any commercial relationship with Circle. The stronger the network, the less Circle has to pay to grow it. Second, growth in on-platform USDC (i.e., dollars held within Circle's own infrastructure rather than on partner platforms) that carries better economics. On-platform USDC grew 5.6x YoY to $12.5 billion at year-end, representing 17% of total circulation, up from roughly 3% a year prior. Third, growth in other revenue (covered next) adds high-margin dollars on top of the reserve income base, improving blended margins.

Other Revenue (The Emerging Layer)

Circle has begun monetising transaction flows and network infrastructure beyond pure reserve income. In FY 2025, other revenue reached $110 million, exceeding their guidance of $90-$100 million. These revenues come from two buckets.

Subscription and services revenue is primarily from blockchain network partnerships. When Circle deploys USDC onto a new blockchain, it often receives both upfront integration fees and ongoing recurring revenue. Circle added 12 new chains in 2025. This revenue stream is relatively “lumpy” because of the upfront component, although the recurring base is growing steadily underneath.

Transaction revenue comes from blockchain rewards (Circle runs validator infrastructure, including a super validator on the Canton Network), USYC redemption fees, and emerging payments-related fees. The Canton Coin trading launch drove an outsized Q4 contribution.

What matters most about this revenue segment is not the dollar amount ($110M). Rather, it is that these revenue streams are high margin and scale with network adoption and transaction volume rather than interest rates. For FY 2026, Circle guided other revenue of $140-$160 million, implying 27-45% growth. I think this is conservative given the pipeline of new products (CPN monetisation, Arc Mainnet fees, StableFX), but the base is still small relative to reserve income. This segment needs to scale meaningfully before it moves the needle.

4. Product Offerings

Circle's products span four core areas today, with two emerging platform layers that are pre-revenue but strategically important to the thesis.

USDC (The Core)

This is very much the core revenue driver for the business. USDC is a fully reserved digital dollar that operates across 32 blockchain networks. Every token is backed 1:1 by cash-equivalent assets, primarily short-term U.S. Treasuries and repurchase agreements managed by BlackRock. 96% of total revenues in 2025 came from reserve income, tied directly to stablecoins, of which USDC is the largest driver by far.

The question is, what gives USDC a moat? Why can’t other players simply enter with their own stablecoins and take share?

The beauty of USDC lies with the infrastructure stack built around it.

1. Circle Mint provides enterprise-grade minting and redemption, the primary market where institutions can create or destroy USDC by depositing or withdrawing dollars through Circle's banking infrastructure.

2. Circle has facilitated over $1 trillion in mint/redeem volume since 2018, and in Q4 2025 alone, mint/redeem volume was $163 billion. This primary liquidity, backed by relationships with systemically important banks globally, is one of Circle's deepest moats.

3. CCTP (Cross-Chain Transfer Protocol) is another critical piece of USDC infrastructure. It enables native burning and minting of USDC across blockchains, eliminating the need for "wrapped" or "bridged" versions that introduce counterparty risk. CCTP volume grew approximately 640% year-over-year in Q3 2025 to $31.3 billion. By Q4, CCTP represented over 50% of all bridged volume across all assets and all bridge providers, not just USDC.

EURC (Euro Stablecoin)

EURC is the largest regulated euro-denominated stablecoin, with €310 million in circulation at year-end 2025, up 3.8x year-over-year. This is still small in absolute terms, especially when compared to USDC.

As CPN scales cross-border payments, having native stablecoin pairs for on-chain FX (dollar-to-euro, dollar-to-other currencies) becomes a building block for payments infrastructure. Circle was the first stablecoin issuer to register as an Electronic Money Institution under MiCA in the EU, which gives EURC a regulatory head start in Europe.

I’m skeptical on the take-up rate of non-USD stablecoins in an environment where even European, Asian and South American users typically use USDC/USDT.

USYC (Tokenised Money Market Fund)

USYC is a tokenised U.S. Treasury and money market product that Circle acquired through its purchase of Hashnote in January 2025. It grew to approximately $1.7 billion and became the second-largest tokenised money market fund in the world. USYC is designed to serve as yield-bearing collateral in digital asset markets.

Institutions can hold USYC to earn yield and seamlessly swap into USDC when they need cash for trading or settlement. The integration with Binance to accept USYC as collateral in June 2025 was seen as a significant milestone. Circle's long-term vision is that the architecture of "yield-bearing collateral + digital cash" will become the standard for capital markets, on both crypto-native and traditional exchanges.

Personally, I’m not convinced that either EURC or USYC will be significant contributors. I think investors have to view both of these as call options and not ascribe any value to it. For the foreseeable future, USDC is and will remain the core driver for reserve income.

Circle Payments Network (CPN)

CPN is an application layer for cross-border money movement built on top of the stablecoin network. It is essentially the SWIFT of the stablecoin world.

As of February 2026, CPN had 55 enrolled financial institutions (up from 29 in Q3 2025), with 74 more in eligibility reviews and a pipeline of over 500. It was live in 14 markets with 11 more planned. Annualised payment processing volume (PPV) reached $5.7 billion, up 68% since the prior quarter.

The initial use cases for CPN are B2B cross-border merchant settlement (businesses exportign from Asia and importing into emerging and developed markets), along with south-to-south and north-to-south remittance applications.

What makes CPN architecturally different from Visa or SWIFT is that it's an open, extensible network. Third-party developers can deploy modules onto CPN. The first third-party apps are already launching, including a trade receivable credit module. Circle has built a refund protocol (transaction reversibility) and a companion insurance protocol for underwriting reversals. These are composable building blocks that don’t exist in closed payment networks.

CPN is still not monetised yet. Circle is currently focused on growing the network and its flows, with monetisation expected to follow as scale develops. I think this is the right call strategically.

Arc (Layer 1 Blockchain)

This is Circle’s most ambitious and speculative product. Arc is a new Layer 1 blockchain purpose-built for regulated financial activity. Layer 1s are notoriously competitive. Thousands of Layer 1s have been built in the past, but as of today, only a handful have succeeded. Arc’s angle here is to include sub-second deterministic settlement finality, low-cost USDC-denominated gas fees, and configurable privacy controls with opt-in confidential transfers. To put it in layman terms, it means to be very quick, very cheap, payable in USDC for zero complexity, and to allow for privacy.

Arc launched into public testnet in Q4 2025 with over 100 companies participating including Goldman Sachs, Deutsche Bank, Visa, Mastercard, Apollo, AWS, BlackRock, HSBC, and Standard Chartered. The testnet achieved near-100% uptime, half-second settlement finality, and over 166 million total transactions. Mainnet launch is planned for 2026.

Circle is also exploring a native token for Arc to drive utility, incentives, and governance. This hasn't been confirmed, but if launched, it could represent meaningful additional value for Circle, though it also introduces complexity around token economics and regulatory considerations.

The truth is that Arc remains entirely pre-revenue and is a speculative project. It could be a potentially transformative new business segment, but I do not expect it to be a needle-mover anytime soon. I will discuss the bull and bear case for this in later segments.

Developer Tools & Infrastructure

Apart from these consumer-facing products, Circle also provides a full stack of services for developers from programmable wallets, a smart contract platform, Circle Gateway for cross-chain USDC activities, and xReserve for supporting USDC expansion across blockchain ecosystems.

These are underrated tools that help to make the rest of the product stack usable for enterprises, especially those that have never touched blockchains before. These tools are not monetised and therefore won’t show up in financial statements, but are essential to the platform strategy.

5. Moats & Differentiation

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S&P 500: +9.30%
NASDAQ: +14.30%

April was, in many ways, the mirror image of March. Both the S&P 500 and the Nasdaq just posted their best monthly performance since 2020. The S&P 500 closed the month at 7,209.01, a fresh all-time high and its first ever close above the 7,200 threshold. The Nasdaq notched 24,892.31, also a new record. The MAG7 gained over 16% on the month, semiconductors rallied an extraordinary 37%, and communication services led all sectors with an 18.4% gain.

The pivot point was April 7th-8th, when President Trump announced a two-week ceasefire with Iran. As I discussed in previous portfolio reviews, the silver lining in this crisis is the fact that these events could all be erased by a singular individual.

Interestingly, in the final two days of April, the war premium was creeping back in. Brent briefly touched $126 per barrel on April 30th, the highest level since 2022, as US-Iran negotiations stalled, the Strait of Hormuz remained functionally closed, and Trump signalled an extended blockade. Stocks and Oil are up at the same time, which makes it even more confusing. I would not be surprised to see another bout of volatility if the ceasefire formally breaks down.

But as I have done in previous months, my decision in geopolitical uncertainty is always to buy businesses that do well regardless.

Portfolio Performance (Since Inception)

(Portfolio Inception Date: 27th October 2023)

Portfolio: +163.05%

S&P 500: +72.48% (Outperformance: +90.57%)

NASDAQ: +99.49% (Outperformance: +63.56%)

Portfolio Performance (YTD)

Portfolio: -11.50%

S&P 500: +4.24% (Underperformance: -15.74%)

NASDAQ: +6.34% (Underperformance: -17.84%)

Portfolio reviews are exclusively for paid subscribers. If you would like to gain access to my portfolio holdings, deep dives, and tons of other articles, do consider subscribing.

I post several articles per month, ranging from extensive 50-60 pager deep dives on the most interesting businesses I can find, to shorter articles on valuations, market musings and specific verticals/geographies.

In the past month, I’ve shared these articles with subscribers:

Free subscribers get access to posts too, of course, with free earnings reviews and occasional articles.

In the next few segments, I discuss my general thoughts on the market, portfolio companies, performance, portfolio allocation and portfolio changes.

General Thoughts on the Market & Performance

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At the time, the stock traded at $77. The stock went on a strong run from then till September 2025, with the most recent high at $199.30. In the past 8 months, the stock has seen an incredible drawdown, trading as low as $77 (again) in late March, down over 61% from 52-week highs.

In this piece, I will give an update on my view of Sea Limited today and my plans for the stock moving forward.

Quick Summary of Initial Sea Limited Thesis

This was my initial thesis for Sea Limited in September 2024 when I published the write-up. Today, I believe the points remain.

Summary Update

In the past quarter, there have been several events and updates worth discussing. Let’s break it down below.

FY 2025 Financials:

This was, by almost all metrics, the best year in Sea’s history. FY 2025 revenue grew 36.4% YoY to $22.9B, while gross profit grew 42.2% to $10.2B, and net income reached $1.6B versus just $447.8M in 2024. Adjusted EBITDA was up 75.2% to $3.4B.

Shopee delivered $16.6B in revenue (+33.4% YoY) and $880.6M in Adjusted EBITDA, up from just $155.8M in 2024. Management shared that Shopee now serves 400 million active buyers and 20 million sellers, with FY 2025 GMV reaching $127B.

Monee was the standout segment in 2025. Revenue grew 60.1% YoY to $3.8B, with Adjusted EBITDA crossing $1B for the first time. The loan book reached $9.2B, up 80.4% YoY, while NPL90+ stayed disciplined at 1.1%. Over 20M unique first-time borrowers were added during the year, reaching a total of 37M active credit users.

Garena also had its best year since 2021, with bookings up 37% YoY to $2.9B and Adjusted EBITDA of $1.7B. There were over 100 million daily active users on average across the entire year.

Capital Allocation:

Management announced a $1B share buyback in November 2025, the first material capital return in Sea's history. I thought this was a significant signal that the company has crossed into a "mature compounder" phase rather than just a hyper-growth story. Cash and equivalents continued growing to over $11B.

2026 Guidance:

Management guided for Shopee GMV to grow ~25% YoY in 2026, which was generally a beat on consensus estimates. They also guided for Monee loan book to grow meaningfully faster than Shopee’s GMV. Garena bookings to grow double digits. Group-level adjusted EBITDA guided to be “at least flat” versus 2025.

Why Is The Stock Down?

Let’s address the elephant in the room. The sell-off, in my view, is a combination of three forces hitting Sea simultaneously.

1. 2026 EBITDA guidance disappointed

I believe the market had priced in continued operating leverage, which would have required growing Adj. EBITDA numbers in 2026. By guiding for “at least flat” EBITDA on top-line growth of 25%, it meant an EBITDA margin of ~0.7% of GMV this year, versus the Street’s prior expectations of ~1.2%.

2. Competition from TikTok Shop

Adding to the fear, TikTok Shop’s growth in the past few years have been nothing short of staggering, leading to fears that it could be wrestling market share from Shopee. J&T Express, the main logistics partner of TikTok Shop has seen an acceleration in growth over the past year or so. The market has largely viewed Shopee’s investment in its VIP program, logistics investment and AI capabilities as an act of desperation to defend market share.

3. Geopolitical Worries + Oil Concerns

The Iran-U.S. war which ultimately led to the SoH closure has hit Southeast Asia with over two-thirds of the region’s crude oil imports transiting through the SoH. About 90% of the oil and 83% of the liquefied natural gas that normally pass through the Strait of Hormuz are bound for Asia. This has led to fears of a slowdown in general consumption across the region.

These headwinds are real and could persist. However, none of these headwinds change the core thesis, as I will discuss below.

Addressing the Concerns

Let me address each of these one by one, because I believe the market is significantly mis-pricing the situation.

On 2026 EBITDA Guidance

The core bear thesis and fear that has shrouded the business due to the weak EBITDA guidance is that the margin compression is structural and permanent. It assumes Shopee is being forced into permanent reinvestment to fend off TikTok Shop and that terminal margins might be closer to 1% of GMV rather than the 3% or higher that bulls had hoped for.

This cannot be further from the truth. When we look at the e-commerce space and where terminal margins might be heading, it’s hard to avoid China, where the space is intensely competitive and probably 5-10 years ahead of Southeast Asia. There are 4 main players in the region, Alibaba, JD, PDD and ByteDance. Despite the fierce competition, it is notable that during the period of competition between 2022 to 2024, they ran at 2.5%, 1.1%* and 1.9% EBITDA/GMV.

*JD’s 1.1% here is an outlier due to its focus on 1P, electronics and home appliances focus where margins are materially lower.

Shopee as a 3P marketplace with a much higher mix of apparel, beauty and long-tail SKUs which carry far higher take rates and margins, should be compared to Alibaba and PDD. As long as TikTok Shop remains rational in pricing and competitiveness, we should see Shopee’s margins trend towards 2% or higher in the coming years. (More on this later)

On TikTok Shop Competition

This is probably the largest concern for investors today, and is directly tied to the above point. Let’s look at what the data says.

Alternative data (Yipit) suggests that TikTok Shop's GMV growth in Southeast Asia has decelerated materially over the past few quarters, from ~70% YoY in Q2 2025 down to ~30% YoY by late 2025. That's only modestly above Shopee's own ~25% YoY growth. More importantly, TikTok's relative market share versus Shopee in Indonesia, the region's largest market, has effectively flat-lined over the past year. (This can be seen in Momentum Works’ report too)

Of course, this data could be wrong. So let’s look at another key tell. TikTok Shop has been raising fees in the past year, following Shopee’s footsteps within days. This is a sign of stabilising competition, not one of an aggressive competitor trying to capture share at all costs. This was also corroborated by management’s comments in Q3 2025 and Q4 2025’s earnings calls where they specifically mentioned:

“What we see is a relatively stable competitive landscape. I think as you can probably observe as well from your own sources, we didn’t see any particular market behaving differently from another. The trends in competitive intensity and behaviour have been fairly consistent across Southeast Asia.”

- Sea Limited Q3 2025 Earnings Call

When we look at absolute numbers, the picture isn’t as scary as the headlines suggest too. TikTok Shop did ~$45B in GMV last year versus Shopee at ~$127B. Internal targets at TikTok Shop reportedly point to ~50% growth for TikTok Shop in 2026, while Shopee is targeting ~25% growth. If both of these targets play out, TikTok would add ~$22B in GMV as compared to Shopee’s ~$32B. Shopee is still growing faster in absolute terms and increasing their competitive lead in terms of logistics.

There is also a more nuanced point worth making here. Most of TikTok Shop's growth is coming from rural areas and Tier 2/3 cities, consumers who are entirely new to e-commerce. Many of these are impulse buys triggered by watching livestreams. Crucially, this is a segment of the population that Shopee had never been able to acquire due to the higher relative shipping costs, lower discretionary income and lower purchase frequency. In this way, TikTok Shop is likely expanding the overall e-commerce TAM and pie, rather than eating Shopee’s lunch directly. As these consumers mature into savvier shoppers, many will inevitably find their way onto Shopee too.

What about J&T’s growth in parcel volume share within SEA, with TikTok Shop being the major contributor?

The most common pushback, which I myself have highlighted, is around J&T Express’ reported parcel volume growth of ~74% YoY in Q4 2025. Let’s break down the growth here:

• Underlying SEA e-commerce parcel market growth: If J&T had simply held share flat at 27% (2024 levels), it would have grown 39% just by riding the tide.

• Per J&T's own 1H25 prospectus filings, its market share rose from 28.6% in 2024 to 34.4% in 2025. That's another ~28% of growth from share gains alone.

• Non-Platform Parcels: J&T's non-platform parcel business has grown materially in the past year and possibly accounts for ~5-10% of growth.

When we put all these together, you can see why J&T’s headline growth number is a misleading proxy for TikTok Shop’s underlying performance. Adding the numbers up, it reconciles pretty well, without requiring TikTok Shop to be growing at a scary rate that the headline implies.

The SEA logistics market is consolidating around J&T as smaller players exit, and J&T is leveraging its scale to expand into adjacent non-platform business lines. Neither of these is a Shopee bear signal.

If anything, the competitive backdrop appears to be improving, not deteriorating. And if that is correct, then Shopee’s current reinvestment cycle could be an offensive choice to widen the moat while competitors are seeing slowing growth, rather than a defensive scramble to stay alive.

On Geopolitics & Oil

The Iran-U.S. conflict and the SoH disruption are real, and it's affecting consumer sentiment across the region. With ~2/3 of SEA's crude oil imports transiting through the SoH, a slowdown in regional consumption is a legitimate near-term concern.

That said, two things are worth keeping in mind. Firstly, this is a macro headwind that affects all consumer-facing businesses across the region. It is not Sea-specific, and Sea is no more exposed than any other consumer business in SEA. If anything, e-commerce tends to be more resilient than offline retail in downturns due to its discount-led value proposition.

Secondly, my thesis on Sea is decade-long. I've said before that I believe Sea will be the first SEA-headquartered trillion dollar business. That trajectory is built on the structural digital adoption of 600M+ people, not on whether oil prices spike for a few quarters. If the macro environment remains weak, Sea will face short-term revenue and credit risks at Monee. But the long-term opportunity is unchanged, and a weaker macro environment historically favours the strongest players in any market, which Sea undeniably is in SEA.

Valuation Today

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In this piece, I wanted to cover something slightly different from usual.

While I often share deep dive research reports, I thought it might be helpful for some of you if I were to document my own research process too.

Here’s my no-nonsense approach to research as a long-term minded investor.

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Step 1: Always start with the business

Before I look into valuation, stock prices, sentiment etc…

I always ask these 5 simple questions:

1. What problem does this company solve?

This sounds basic, but you'd be surprised how many investors can't articulate this clearly for stocks they own. If I can't explain the problem the company solves to a 10-year-old, I probably don't understand the business well enough to invest in it.

The best businesses solve painful, recurring problems that customers can't easily ignore. The more painful and unavoidable the problem, the more durable the business tends to be.

2. How does it truly make money?

Revenue composition is massively important for me. I want to understand the actual mechanics of monetisation. Is it a subscription model with predictable recurring revenue? A transactional model where revenue scales with volume? A platform model that takes a cut of every transaction? An advertising model dependent on eyeballs? Each model has very different characteristics in terms of predictability, scalability, and resilience during downturns.

I dig into the revenue breakdown by segment, geography, and customer type. I want to know if 40% of revenue comes from a single client (a major red flag) or if it's diversified across thousands of customers. I also look at how the company prices its product (per seat, per transaction, usage-based), because pricing power is one of the clearest indicators of a strong competitive position.

3. Why do customers choose this business over other alternatives?

This is where I start thinking about differentiation. I compare the business to its competitors, look through NPS scores, GlassDoor ratings, and more. I also look at churn rates and net revenue retention rates, if existing customers are spending more each year, it is a good indicator that they love the product.

4. What is the company’s moat?

The company’s moat determines how long it maintains its competitive advantage. As a long-term investor, this is possibly the most important question to ask.

I focus on the 5 main moats, network effects, switching costs, intangible assets, cost advantages and efficient scale. There is a 6th that isn’t a traditional moat, but one that I view to be the greatest moat of them all, and that is innovation. The 5 main moats are static moats that have been built in the past. Innovation makes a business a moving target.

The best businesses have multiple moats that are widening over time. I pay close attention to this distinction as a business with a large but narrowing moat is more often that not, a value trap.

5. What would kill this business permanently?

As Charlie Munger said: “Invert, always Invert”. Rather than focus on what can go right, it is sometimes more important to focus on what can go wrong. This question forces myself to imagine a scenario where the stock goes to zero and working backwards from there.

What would have to happen? Regulatory action that bans the product? A technological shift that makes it obsolete? A competitor that offers the same thing for free? Customer behaviour shifting away entirely?

The key word here is “permanently”. Every business goes through cycles of temporary uncertainty, be it recessions, bad quarters, PR crises etc. This question focuses on existential risks. If the only scenarios I can construct for permanent destruction are extremely low-probability events, that's a good sign. If I can easily imagine a realistic path to obsolescence within 5-10 years, that's a dealbreaker for me.

Oftentimes, just answering these 5 questions, gives me a very good understanding of whether to proceed with my analysis. For instance, if a business has no moat, or makes money in a non-sustainable manner, it would make the decision very easy for me. I simply move onto the next.

Step 2: Company History

The next step for me would be to look deeper into the history of the business.

It is my belief that truly understanding the current context of the business and structure of the company is only possible after learning about how the business got to this stage.

In the past, this would include tons of google searches, reading biographies, wikipedia pages, company filings and even books.

However, with LLMs today, it all begins with a prompt. This is what I like to use:

“Give me a comprehensive, chronological company history of [Company Name] from its founding to the present day [Insert today’s date]. I want this to be extremely thorough and detailed, written at the level of a professional investment research report or business case study, not a short summary.

Include and clearly explain the founding story, key founders and early executives, evolution of each business segment, major strategic decisions and pivots, important product launches, capital markets events, crises and downturns, key partnerships and acquisitions, as well as recent strategic direction.

Do not omit uncomfortable details. Treat this as a complete history chapter for an investor who will challenge missing years, unclear leadership changes, and vague claims. Use high-quality primary sources wherever possible (SEC filings, annual reports, earnings call transcripts) and provide citations for important claims.”

Importantly, this is just the starting point for my research. Once I find a thread I can pull on, I then re-prompt to find out more details regarding that specific event and/or individual for instance.

What I’m actually looking for in the company history includes:

• Founder-Market Fit

  • Did the founders start this company because they deeply understood the problem, or was it a pivot from something unrelated? Companies born from genuine domain expertise tend to make better long-term strategic decisions.

• Capital Allocation Track Record

  • How has the company deployed capital over time? Were acquisitions value-accretive or dilutive? Did they buy back stock at good prices or at the top? Did they invest in R&D consistently or slash it during downturns? A 10-20 year track record of capital allocation tells me more about management quality than any single earnings call.

• Crisis Behaviour

  • How did the company navigate past recessions, competitive threats, or operational failures? Companies that emerge from crises stronger, through management decisions like cutting costs intelligently, gaining market share through short-term pain, or making opportunistic acquisitions for instance, tend to be run by exceptional management teams.

• Strategic Consistency

  • Has the company stayed true to its core mission, or has it chased trends? Some pivots have been brilliant (Netflix from DVDs to streaming), but most diversification efforts destroy value. Businesses must have a coherent strategy that ensures they stay the course.

I often feed this prompt into multiple LLMs as they tend to come up with differing approaches and results. Regarding deep research, my favourite* LLMs in order are ChatGPT, Claude, Grok, followed by Gemini.

*Note that this changes often as LLMs update their models and this is as of today’s post.

Step 3: Industry Landscape

Once I’ve grounded myself in the company’s core business and historical evolution, I shift my focus onto the broader ecosystem it operates within.

This is absolutely crucial in contextualising the company’s position.

After all, even a great business can falter if it operates in a shrinking market or gets out-competed by younger, hungrier competitors.

These are the key questions I ask:

1. What’s the total addressable market and the growth trajectory of this industry?

I want to understand both the current market size and, more importantly, the direction. A $50 billion market growing at 15% annually is a very different investment proposition than a $500 billion market growing at 2%. Both can produce great investments, but they require very different frameworks. Personally, as a growth investor, I look for large and growing markets. Another important point is penetration rate; specifically, how much of the TAM has been captured? Early-stage markets with low penetration rates offer the most explosive growth potential, but they also carry more uncertainty.

2. Who are the key players, and how do they stack up against each other?

Here, I map out the competitive landscape in detail. Market share data, growth rates relative to competitors, profitability comparisons, and product differentiation. I want to understand the industry structure. Is it a winner-takes-all market, a duopoly, or a fragmented market that is set for consolidation? Each structure implies different competitive dynamics and margin trajectories.

3. Are there regulatory tailwinds or headwinds?

Regulation can make or break an industry. Some regulations create barriers to entry that protect incumbents (banking, healthcare). Others can disrupt entire business models (data privacy laws impacting ad-tech). I pay particular attention to regulatory direction. Is the trend towards more or less regulation, and how does the company I’m researching stand to benefit or suffer? (Also take note that different geographies have very different regulations by sector)

4. What could potentially disrupt the industry?

I think about this from a first-principles perspective. What underlying technology, consumer behaviour, or economic shift could fundamentally change how this industry works? For example, AI is currently disrupting software per-seat businesses, electric vehicles are disrupting traditional ICE automakers, digital payments are disrupting traditional banks and legacy payments rails, and quick commerce is set to disrupt traditional grocery models and physical retail to a further extent. The key here is to understand whether the company I'm researching is the disruptor, the disrupted, or relatively insulated.

To gather this, I start with high-level overviews from sources like McKinsey reports, Grand View Research reports, industry associations, slide decks from the company or competitors. I also utilise LLMs, with a prompt like this:

“Provide a detailed analysis of the [Industry Name] as of [today’s date], including market size, growth projections (CAGR over 5-10 years), key trends, regulatory environment, and major competitive forces using the most suitable framework. Focus on [Company Name]’s position within it, comparing it to top competitors like [list 3-5 relevant peers]. Use data from primary sources such as Gartner, IDC, SEC filings, earnings reports, commentary and call transcripts, and recent analyst reports, with citations.”

With this data in hand, I begin to gain a much better understanding of the business model, competitive advantage of the particular company, and whether there is a case to be had for investing.

Step 4: Financials

Numbers aren’t everything, but they play a large part, especially with regard to valuation. Also, management and analysts may lie, but numbers don’t lie.

I dive into the financials. My favourite tool here is Fiscal AI. There are of course sources where you can access company financials for free such as Yahoo Finance, Morningstar, etc…

Personally, I use Fiscal AI as they provide up to 20 years of data in a very standardised and easy to use format. I highly recommend using them if you aren’t already doing so.

For those interested, I have an affiliate link that gives you 15% off the subscription pricing. Or, simply use the free version which works great too.

Here, I review the last 5-10 years of the 3 core financial statements (Income Statement, Balance Sheet, Cash Flow Statement). I focus particularly on top-line growth rate, which I utilise to judge which part of the business life cycle it is in.

My favourite businesses to invest in lie within self funding and operating leverage. These are typically businesses that are inflecting towards profitability or are at the early stages of operating leverage in the business.

Another key focus is with regard to margins. For industry disruptors, I would compare to industry heavyweights to get a gauge of where the optimal margin profile would be. This will be very helpful in the valuation stage of the analysis.

Other key areas of focus:

• Revenues: Are they recurring or one-off? Is there geographic diversity? Is there significant customer concentration?

• Profitability: Have margins expanded over time? What is the optimal margin profile for the business? Is there room for operating leverage?

• Efficiency & Returns: This goes more for businesses that are in Stage 4 and 5 of the life cycle chart above. I focus on ROIC/ROE, working capital cycles. For tech businesses, I look at R&D/CAPEX as % of revenue.

• Balance Sheet: How much cash does the business have? Are their debt levels elevated? Is it a business that requires enormous leverage?

• Cash Flows: Especially if the business is unprofitable, I want to ensure they are free cash flow positive or reaching there imminently.

• Stock Based Compensation: Is it egregious? How is management compensated, is it based on top or bottom-line or stock price performance?

This step takes the longest, but is non-negotiable for me. I’ve avoided many losses by spotting eroding fundamentals early.

Step 5: Management

Of course, numbers only tell one side of the story. Management is arguably the most important for me.

Think of all the successful businesses over the years. Each of them have been run either by extraordinary entrepreneurs or ruthless executioners. Think Apple, Microsoft, Tesla, Google, Nvidia. Each of these businesses are closely tied to one or two individuals who have been the face for decades.

Ultimately, businesses are people-driven, so I scrutinise the stewards of capital very closely.

I profile the C-suite and board:

• Is the founding team still in-charge?

• Read as many news reports, especially if they are first-hand interview transcripts.

• Watch as many interviews of the C-suite/Board as possible, going back 10-20 years if possible. Understand how their views have changed over time. Are they trustworthy people?

• Is the board filled with “Yes Men”? Or do they constantly challenge decisions? I want a board that is intellectually honest and willing to be contrarian.

• Does the C-suite have skin in the game? Is the company stock the majority of their net worth?

• How do they handle tough questions? Do they give direct, thoughtful answers, or do they deflect, ramble and redirect to pre-planned talking points?

• Do they under-promise and over-deliver, or vice-versa? I go back through old earnings call transcripts and compare forward guidance to actual results.

• How do they discuss failures? Every company has bad quarters, failed products, or strategic missteps. Leaders who own these mistakes openly and explain what they learned earn my trust. Those who blame macro conditions, one-time events, or "transitory" factors for repeated misses do not.

Step 6: Valuation & Scenario Modelling

The final decision to invest, often comes down to valuation. More specifically, investors should warrant a margin of safety when investing.

Valuation isn’t precise, but is often probabilistic. There are a huge variety of different methods to value a business, but I do believe that every business has an optimal way of being valued.

For instance, diversified conglomerates like Sea Limited and Mercado Libre, in my view, should be valued through a Sum-of-the-Parts valuation model. DCFs are generally one of my favourite methods and is considered by many to be the gold standard. Multiples is another method to value, through P/E, P/S, EV/EBITDA and other various ratios.

Valuation often determines the amount of size I deploy into a stock, and I think it is absolutely key to nail this down.

Choosing the Right Valuation Method:

Discounted Cash Flow (DCF):

The DCF is generally one of my favourite methods and is considered by many to be the gold standard. The core premise is simple: a business is worth the sum of all its future cash flows, discounted back to present value. However, this is a very subjective process and that is where numbers tend to differ.

My approach to building a DCF:

• Revenue projections: I start with the company’s own guidance, then cross-reference with industry growth rates, competitive dynamics, and historical trends. I build a 10-year explicit forecast period, with revenue growth rates that gradually decelerate towards the industry’s long-term growth rate. The key is to temper expectations and never assume hyper-growth persists indefinitely.

• Margin assumptions: I project margin expansion (or contraction) based on the operating leverage analysis from Step 4, benchmarked against mature peers. In certain cases, where I expect a disruption in the business model, terminal margins could be higher than

• Discount rate: I use WACC (weighted average cost of capital) as my discount rate. For most established companies, this falls in the 8-12% range. For higher-risk growth companies, I use a higher rate (12-15%) to account for the additional uncertainty. Some investors use a flat 10% as a simplification. I don’t disagree with this approach as long as you’re consistent.

• Terminal value: This is the most important and most dangerous part of the DCF, as it typically drives 60-80% of the total valuation. I use both an exit multiple approach and a perpetual growth rate approach, and I check them against each other. I never use a terminal growth rate above 3-4% (roughly in line with nominal GDP growth), and I sanity-check the implied exit multiple to make sure it’s reasonable relative to the company’s peer group.

Multiples-Based Valuation:

Multiples is another method to value businesses, through P/E, P/S, EV/EBITDA, and other various ratios. While simpler than a DCF, multiples can be misleading if used sloppily. The key is selecting the right multiple for the right type of business:

• P/E works well for mature, profitable companies with stable earnings.

• EV/EBITDA is better for companies with varying capital structures, as it strips out the effects of debt and taxes.

• P/S (price-to-sales) is useful for high-growth companies that aren’t yet profitable, but should always be used alongside a clear path-to-profitability analysis.

• P/FCF (price-to-free cash flow) is my preferred multiple for companies that are already generating meaningful cash flow as it cuts through accounting noise.

I personally always compare multiples to historical averages and peer comparisons. For instance, where has the stock traded over the last 5-10 years? How does this compare to similar companies in the space? A stock trading at 30x earnings might look expensive in a vacuum but could be cheap if the company is growing twice as fast as peers trading at 25x.

Sum-of-the-Parts (SOTP):

For diversified conglomerates like Sea Limited and Mercado Libre, I believe SOTP is the most appropriate approach. These companies have distinct business segments with very different growth profiles, margin structures, and comparable companies. Valuing them on a blended multiple obscures the true value of each piece. I value each segment independently using the most appropriate methodology (DCF or multiples), sum the values, subtract net debt, and divide by shares outstanding.

Valuation often determines the amount of size I deploy into a stock, and I think it is absolutely key to nail this down.

Step 7: GabGrowth Quality Score

I use a checklist scoring system to rate stocks. The best investments have common, durable traits. I’ve used what I found over many years to come up with this and enables me to separate the good from great businesses.

I’ve written a full piece (FREE) on this that you can view below.

Step 8: Portfolio Fit & Final Decision

Ultimately, the final decision comes down to this step. While I’m not against investing a huge portion of my portfolio into a particular sector if I believe there are significant tailwinds going for it, I do need to compare the new company I’m adding to others that are already in the portfolio.

Every dollar I allocate to a new position is a dollar I'm not adding to an existing holding. So the new company doesn't just need to be "good", it needs to be better than adding to my current highest-conviction positions.

Regarding position sizing, I use a tiered approach based on conviction level and risk profile. For a high-conviction idea with a high margin of safety, I’m willing to size it at over 5% of the portfolio to start and letting it compound from there. I also tend to size up over time as the business proves itself through strong earnings beats. Each quarterly report is an opportunity to test the thesis. If the company is executing as expected or better, I'll add to the position on pullbacks. If the thesis is deteriorating (for e.g., slowing growth, compressing margins, poor management decisions), I’ll reduce or exit regardless of what the stock price is doing.

I will let my positions grow over time and am not afraid for a single name to become a substantial portion of my holdings. However, I will typically try to limit any one holding to around 30% of total portfolio size. Beyond that, the position-specific risk becomes too large regardless of conviction. If a position naturally grows past 30% through price appreciation, that's when I start trimming.

Final Thoughts

I hope this sharing is helpful for some of you who would like to get into the habit of researching stocks. I’ve always believed in the Peter Lynch saying:

“The person that turns over the most rocks wins the game”

This process is tedious and extremely tiring, but also very rewarding. A thorough analysis takes me anywhere from a few days to several weeks, depending on the complexity of the business. But rushing through it defeats the purpose entirely. The whole point is to build conviction, as it is the only way to hold through volatility, add on weakness and ignore the noise.

A large part of my investing success has been putting in the hours to study businesses. Less than 10% are investable ideas, but every single one has lessons to be learned. The companies I pass on sharpen my pattern recognition for the companies I eventually invest in.

Thank you for reading!

-Gab

These are not banks, nor PayPal clones, and definitely not crypto projects.

Instead, they are ecosystems that began as ride-hailing apps or e-commerce platforms with the ultimate goal of becoming the primary financial institution for hundreds of millions of people who have never had a bank account to start with.

The scale of the opportunity is massive. More than 70% of Southeast Asia’s adult population remains either unbanked or underbanked, lacking access to credit, insurance, investments and even basic savings products.

The companies who recognised this earliest have now built substantial businesses off the back of this, compounding at extraordinary rates.

Monee, Sea Limited’s FinTech arm, grew its loan book by over 80% in 2025 to reach $9.2 billion. GrabFin, Grab’s FinTech arm ended the year with a loan portfolio larger than $1 billion. GCash has over 90 million registered users in the Philippines, a country of 115 million people. MoMo in Vietnam has over 40 million users while Indonesia has a flourishing FinTech landscape with Monee (owned by Sea Limited), GoPay (owned by Gojek), Dana and OVO (owned by Grab) sharing the spoils.

In this piece, we will discuss the Southeast Asian FinTech landscape. Specifically:

• Who the players are

• How they differ structurally

• Where the competitive edge is being built

We will then move from the macro context down to individual company profiles, and close with a framework for thinking about this space as an investor.

Why This Market Is Different

Most Western fintech narratives are about convenience. The winners are typically players that make it slightly easier to move money that people already have access to.

However, in Southeast Asia, it’s a different story. It is more about access than convenience. For a delivery driver in Jakarta or a market vendor in Ho Chi Minh, a digital wallet is not just a better version of what they already have, but rather the only formal financial product they have ever used, or have access to.

To make this clear, here’s an example. In the West, companies like PayPal, Block or Apple have succeeded by making it slightly easier or cheaper to move money that people already had sitting inside the banking system.

In Southeast Asia, most consumers did not have bank accounts, credit histories, or even reliable ways to store money digitally.

That is why companies like Sea Limited, Grab and GCash did not start by competing with banks. They started by solving everyday problems such as ride-hailing, food delivery or e-commerce. Only after they had millions of users transacting on their platforms did they begin layering financial services on top.

Why does this distinction matter so much?

When a company acquires a customer in an underserved market, the switching costs are high because there is no alternative. There is often no incumbent to displace (the incumbent is cash).

Because these platforms often provide the first credit record a user has ever generated, the data moat compounds with every transaction. Every loan taken and repaid, wallet top-up, and transaction taken slowly builds a credit profile that traditional banks have no access to and competitors find difficult to replicate.

The regulatory environment has been much more constructive than many probably expect. While Southeast Asia is much less developed than most countries globally, many of the governments (Indonesia, the Philippines, Singapore, Vietnam, Malaysia) have all introduced digital banking license frameworks in recent years that give ecosystem players like Grab and Sea a regulated pathway into deposits and lending without having to acquire legacy banks.

This has allowed SuperApps like Grab and Sea to formalise their financial operations, fund their loan books at lower cost, and access interbank liquidity, dramatically improving the unit economics of lending over time.

The Players

There are several players in this space, some of which operate in individual countries while others dominate across the region’s key markets. Each of these companies have a different anchor product, value proposition and competitive moat. In this section, I intend to breakdown the differences between each of them.

Monee (Singapore, Malaysia, Indonesia, Philippines, Thailand, Vietnam, Taiwan, Brazil)

We have to start with Monee. It is by almost any measure, the most advanced digital financial services operation in the region. Monee began as AirPay, a simple top-up feature for Garena and subsequently ShopeePay, a wallet bolted onto Shopee’s e-commerce platform. However, it has since evolved into a full-fledged consumer and SME credit business, which is now Sea’s fastest-growing division and perhaps the most strategically important one.

Sea runs 3 main divisions. The largest, Shopee is the leading e-commerce business in the region with over 400 million active buyers. The most profitable division is Garena, their gaming unit that is responsible for the most played mobile game in the world, Free Fire. Monee is the newest segment and the fastest growing.

Since 2016, Monee has grown its revenues at a 105% CAGR, roughly doubling each year. Last year, it brought in $3.8B in revenues, with a 25.6% operating margin on a segment basis. This meant it accounted for nearly half of Sea’s entire EBIT for 2025.

At the end of 2025, Sea disclosed that it had over 37 million credit users on its platform. Importantly, despite the massive user base, there is still much room for growth. Shopee has 400 million active buyers and 20 million sellers that generate a continuous stream of target users for the business.

Apart from this, this massive user base also generates a constant stream of behavioural data that is likely to be immensely useful for Monee. For instance, purchase frequency, basket size, repayment history on Shopee PayLater, merchant cash flow patterns, which Monee can use to underwrite credit at a scale and accuracy that no traditional lender can match.

Sea now has a loan book in excess of $9.2 billion, while growing at 80% YoY. Despite the high growth rates, Sea maintains a very healthy 90-day non-performing loan (NPL) ratio of just 1.1%. This is a signal that the credit model is working even as the platform pushes into broader applicant pools and non-Shopee channels. It also has a deposit base of $3.8B, up 40% YoY from the previous year’s $2.7B.

A notable strategic shift in 2025 was the move from an invite-only lending model to an "all can apply" approach. Management opened the doors to everyone, and default rates did not move. They attribute this to Shopee's transaction data feeding AI underwriting models that process purchase patterns, return behaviour, payment timing, and browsing history through transformer-based models trained on long-sequence behavioural data.

This represents a 46% deposit-to-loan ratio which means nearly half of the on-book loan portfolio is being funded by deposits that probably cost Monee somewhere in the 1-3% range. The other 54% is funded out of Sea’s $11B cash pile or other sources, capital that could otherwise be earning a return elsewhere.

Management also noted on the most recent Q4 2025 earnings call that AI-assisted underwriting is enabling expansion to borrower profiles that were previously considered too risky.

Of note, in terms of risk, is that the $9.2B is largely on-book loans, which means a relatively capital-intensive structure. Just $1B of that $9.2B reflects a capital-light structure where Monee originates and services loans while offloading credit risk to third-party investors.

The off-Shopee expansion is worth watching closely. Off-Shopee SPayLater loans surged over 300% year-on-year in Q4 2025 and now make up more than 15% of the portfolio, with roughly 30% usage penetration in Malaysia. This is the key metric for whether Monee eventually gets valued as an independent fintech or remains tethered to Shopee's GMV growth rate. The BCL (Buy-Consume-Later) product for offline retail and direct consumer financial products are the vectors for this expansion.

One area that deserves attention is credit loss provisions, which surged 76.7% to $1.4 billion in FY2025. This outpaced even the 80% loan book growth, which is why Adjusted EBITDA grew only 40% on 60% revenue growth. The NPL ratio is stable, but the provision amount has gone up massively. This has not been stress-tested by a severe regional macroeconomic downturn or rapid FX deterioration. The loan book is largely unsecured consumer credit across emerging markets (Southeast Asia and Brazil), and it is approaching $10 billion in scale. As long as the NPL ratio holds, the provision build is just the cost of growth. If it does not hold, the capital intensity of the on-book model could become a vulnerability.

Long-term, the ideal scenario would be for Monee to become a marketplace for credit, growing the off-book ratio (currently just $1.0 billion of the $9.2 billion total) and enabling it to improve return on equity as the book scales. Management has guided for Shopee GMV growth of 25% in 2026, with Adj EBITDA no lower than 2025 in absolute terms. This implies Shopee margin compression as subsidies ramp, but Monee's continued scaling should partially offset that at the group level.

GrabFin (Singapore, Malaysia, Indonesia, Philippines, Thailand, Vietnam)

The second largest player that also operates on a regional basis is GrabFin, a subsidiary of Grab. Grab is the leading ride-hailing and deliveries player in the region with over 50 million monthly transacting users on its platform. It commands nearly 60% market share in both categories and is a household name.

Grab's financial services strategy is structurally different from Monee's in that it is deliberately multi-entity. Rather than building everything under a single fintech brand, Grab operates a layered system. GrabFin handles lending to its ecosystem partners (drivers, merchants, users), while GXS Bank (Singapore, with Singtel) and GX Bank (Malaysia) operate as fully licensed digital banks, and Superbank (Indonesia, 37.88% effective equity stake) handles deposits and credit locally.

Grab ended 2025 with a gross loan portfolio of $1.3 billion, with a net loan portfolio of $1.18 billion after provisions, up 120% year-on-year. Customer deposits across GXS Bank and GX Bank grew to an all-time high of $1.6 billion at end-Q4, up from $1.2 billion a year earlier. Notably, deposits dipped to $1.31 billion in Q3 2025 from $1.54 billion in Q2 as Grab proactively cut promotional deposit rates to manage funding costs. The Q4 recovery to $1.6 billion on the back of customer growth rather than rate competition is a healthier trajectory.

The deposit base now serves 7.4 million customers across the three banks. Importantly, there is a very clear cross-sell efficiency here. 76% of GXS Singapore depositors, 93% of GX Bank Malaysia depositors, and 60% of Superbank Indonesia depositors were already existing Grab users. This means Grab is converting super-app engagement into banking relationships with minimal incremental customer acquisition cost.

Revenues have grown at a 75.6% CAGR since 2022. However, Grab’s financial services segment remains unprofitable with a FY2025 adjusted EBITDA of -$110M. This is in comparison to Monee’s FY2025 adjusted EBITDA of $1.02B.

There are several reasons for this disparity.

Firstly, Monee had a five-year head start. Sea started building AirPay in 2014 for Garena top-ups. By 2019, they rebranded to ShopeePay and began embedding credit directly into checkout flows. By the time Grab got its Singapore banking license in 2022, Monee already had a multi-billion dollar loan book across seven markets.

Secondly, Monee is not just a bank that happens to be connected to an app. It has designed itself to be a financial layer embedded inside Shopee where credit exists to drive more Shopee transactions. SPayLater increases the basket size and purchase frequency, and seller loans keep inventory flowing. Therefore, every Shopee user (buyer and seller) is a potential Monee customer without any incremental customer acquisition cost.

GXS is structurally a standalone digital bank that happens to be owned by Grab and Singtel. It can be accessed through the Grab app and uses Grab’s data for underwriting. However, the banking product doesn’t exactly drive more rides or food deliveries the way that SPayLater for instance drives more Shopee orders. There is no closed-loop commerce flywheel to drive deposits and loans. Hence, GXS has to compete for deposits against the likes of traditional banks like DBS, UOB and OCBC in Singapore by offering promotional rates which is a traditional banking acquisition strategy, not an ecosystem play like Monee.

Thirdly, Shopee processes 13.9 billion orders a year across 400 million active buyers and 20 million sellers. Each of these transactions generate SKU-level purchasing data, repayment behaviour on SPayLater, seller cash flow patterns etc… that provide granular data that is then used to map to creditworthiness.

Grab also has extremely useful data such as how often rides are taken, food order sizes, discretionary spend, but it is fundamentally consumption data on a much smaller scale. This can be seen in GMV. Shopee generated $127B in GMV compared to Grab’s total on-demand GMV of $22B in 2025. That is nearly 6x difference and explains why the FinTech gap is so wide.

GCash (Philippines)

GCash is the leading digital wallet in the Philippines. It is backed by Globe Telecom and Ant Group (Alibaba’s Financial Arm), and has over 90 million registered users, in a country of 115 million people. They are effectively a national payments infrastructure.

It was first launched in 2004 as a SMS-based money transfer service under Globe Telecom. This was a critical service at the time with ~80% of Filipinos being unbanked. They employed a very simple model where users could convert cash to e-money via sari-sari stores (think small, neighbourhood retail stores) for a transaction fee of about ₱1 (about 1-2 cents in USD).

It expanded into online payments in 2006, relaunched as a fuller mobile wallet in 2009, and partnered with Western Union in 2010 for inbound international remittances (a big deal given the massive Overseas Filipino Worker economy).

The strategic inflection came in 2015 when Mynt was established as a joint venture between Globe, Ayala Corporation, and Ant Financial (now Ant Group). The Ant partnership brought the Alipay playbook to the Philippines. By 2017, GCash launched the country's first mobile money QR payment system, and by 2018 it had surpassed 10 million users. In 2019, GCash evolved from a payments tool into a nascent SuperApp with GSave (savings via CIMB Bank), GCredit (revolving credit), and GInvest (investments).

The COVID pandemic was GCash’s defining moment. Usage surged as millions of Filipinos used GCash to pay for goods and services online and to send/receive money. GCash also partnered with the Philippine government to distribute pandemic financial aid which was massive for user acquisition.

In November 2021, Mynt raised $300M at a $2B valuation, making it the first double unicorn in the Philippines. In August 2024, GCash secured additional funding from Ayala Corporation and MUFG pushing its valuation up to $5B.

Today, 8 in 10 Filipinos use GCash, with 6 million merchants and social sellers accepting payments. In 2025, GCash disbursed ₱323 billion (USD $5.4B) in loans to 10.2 million unique borrowers, a 73% increase year-on-year. GSave serves 15.3 million users, GFunds has 8.6 million, and GCrypto enables 4.4 million to trade digital assets.

GCash is targeting an IPO in the second half of 2026, delayed from an earlier timeline due to the Philippine stock market's weakness and the company is aiming to raise $1 to $1.5 billion, which would make it the largest IPO in Philippine history.

GCash is basically the closest analog to Alipay in Southeast Asia, though it is only present in the Philippines. The real challenge facing GCash now, is whether it can sustain its lending growth and ARPU expansion as it moves from payments (low-margin, high-volume) to financial services (higher-margin, credit risk).

Maya (Philippines)

Maya is perhaps the most under-appreciated player in this landscape. It is backed by PLDT (the Philippines’ largest telco), Tencent, KKR and the IFC (Private arm of World Bank Group). Rather than building financial services on top of an existing SuperApp, Maya obtained a full digital banking license from the central bank of the Philippines in Sept 2021 and converted from a payments wallet (PayMaya) into a regulated digital bank in 2022. It is perhaps the only player in this piece that is a bank first and a platform second.

What makes Maya worth watching closely is the pace of their financial ramp in recent years. Maya Bank launched in 2022 and disbursed just ₱3.1 billion (USD $52M) in loans that year. In 2023, disbursements jumped to ₱21.5 billion (USD $358M). In 2024, ₱68 billion (USD $1.1B). In 2025, approximately ₱164 billion (USD $2.7B), bringing cumulative disbursements since launch to ₱256 billion (USD $4.3B) across 3 million borrowers. That is roughly 141% annual growth in disbursement volume, to a borrower base that grew 95% year-on-year.

The deposit base has tracked a similar trajectory: ₱25 billion (USD $417M) at end-2023, ₱39 billion (USD $650M) at end-2024, and ₱68 billion (USD $1.1B) at end-2025, a 72% increase over the year. The bank doubled its customer base to 10.7 million in 2025. The loan-to-deposit ratio reached 51.1% in Q1 2025, which signals disciplined capital deployment, and the net interest margin widened to 18.9% from 13.9% a year earlier (as of September 2025). That NIM figure is extraordinary by any global standard, and speaks to the spread available in a market where the borrower base has historically had no access to formal credit at all.

It is important to distinguish between disbursements and the outstanding loan book. Maya's cumulative disbursements of ₱256 billion (USD $4.3B) reflect total loans ever made. The outstanding loan book, the actual on-book credit exposure at any point in time, stood at ₱27 billion (USD $450M) as of September 2025, up 59% year-on-year. Most of Maya's lending is short-duration consumer credit (Pay in 4, Flexi Loan, Personal Loan up to ₱250,000 / ~USD $4,200) that turns over quickly, which is why the outstanding balance is a fraction of cumulative volume.

Credit quality is the one area that needs honest scrutiny. In Q1 2025, Maya reported an NPL ratio of 3.8%, comfortably below the Philippine digital banking industry average. By end-2025, that ratio had climbed to 6.1%. That is a meaningful deterioration over the course of a single year and reflects the reality of pushing into broader, riskier borrower pools. It is still not alarming in context. 59% of Maya's borrowers had never accessed formal credit before using the platform, which means there is no prior credit history to underwrite against. The company is building credit profiles from scratch using AI-driven scoring on transaction data. But the direction of the NPL trend matters, and if it continues rising as lending scales into auto loans, housing loans, and supply chain financing (all of which management has flagged as 2026 priorities), that will be the metric to watch.

Maya posted ₱1.7 billion (~USD $28M) in net income in 2025, its first full year of profitability. It booked ₱1.6 billion (~USD $27M) of that in the first nine months. Revenue growth exceeded 100% year-on-year in 2024, and the Q1 2025 top-line accelerated further. This came just three years after the bank launched, which is a remarkably fast path to profitability for a digital bank operating in an emerging market.

On the payments side, Maya processed over ₱1 trillion (~USD $16.7B) in merchant payments in 2024, making it the largest merchant acquirer among Philippine digital banks. Visa has recognised Maya as the top acquirer for merchant transaction volume in the Philippines. The merchant acceptance infrastructure, built initially through the Maya Center agent network (formerly Smart Padala, which reaches deep into provincial and rural areas), gives Maya physical distribution that pure digital players struggle to replicate. 70% of Maya's customers live outside Metro Manila, and regional loan drawdowns surged 137% year-on-year in 2024.

The competitive dynamic between Maya and GCash is extremely tight, no doubt fuelled by the backing of Ant Group and Tencent. GCash has the user base and dominates peer-to-peer transfers and bill payments, while Maya has the banking license and deposit franchise, winning on deposit growth and credit product depth. Each product launched by one forces a response from the other, which has resulted in the Philippines leading the region on digital financial inclusion metrics.

Maya intends to IPO in 2026, targeting a dual listing, first in the US and then on the PSE in the second half of the year. If Maya lists at anything close to the multiples that Southeast Asian FinTech names have attracted in recent years, it would be the largest Philippine-origin tech IPO in history and would create a direct public market comp for GCash ahead of its own expected listing.

MoMo (Vietnam)

MoMo is Vietnam's dominant digital wallet, with over 40 million registered users in a country of 98 million people. It is a rare case of a Southeast Asian fintech that built scale without a SuperApp anchor.

MoMo grew as a standalone financial super-app, aggregating payments, lending, insurance, and investment services under a single brand without the benefit of a ride-hailing or e-commerce parent.

The company was founded in 2007 (as M_Service) and launched as an e-wallet in 2010. It has raised $434 million across five rounds, with the most recent being a $200 million Series E in December 2021 led by Mizuho, which valued the company at $2 billion. The cap table includes Warburg Pincus, Mizuho, Standard Chartered, Goldman Sachs, Goodwater Capital, and Kora Management.

MoMo’s current chairman is Anthony Thomas, the former CEO of GCash, which gives MoMo a direct connection to the operational playbook of one of the region's most successful digital wallets.

MoMo turned profitable for the first time on a full-year basis in 2024, with revenue growing 27% year-on-year. Revenue had grown from approximately VND 6 trillion (~USD $240M) in 2020 to VND 8.5 trillion (~USD $340M) by 2022, and the 2024 figure is likely north of VND 11 trillion (~USD $440M) based on the growth trajectory.

The company partners with over 50,000 businesses and more than 70 banks and financial institutions, with 300,000+ payment acceptance points nationwide. Its QR code infrastructure reaches into rural markets and traditional wet markets that international platforms have not penetrated.

In October 2024, MoMo repositioned itself from an e-wallet to an "AI-Powered Financial Assistant," signalling a strategic shift toward higher-margin financial services. The platform now offers micro-loans (through bank partnerships), insurance, investment products, stock trading, and BNPL with up to 45 days deferred payment. However, MoMo does not hold a banking licence and does not take deposits directly, which is a meaningful structural limitation compared to Maya or GXS. Its lending is intermediated through partner banks, meaning MoMo earns origination and servicing fees rather than net interest income.

The competitive landscape in Vietnam is more fragmented than in the Philippines or Indonesia. MoMo leads with an estimated 47-56% share of e-wallet users depending on the measure, but faces competition from ZaloPay (backed by VNG, Vietnam's largest tech company), ShopeePay (Sea Limited), VNPay (which dominates QR merchant acquisition for banks), and ViettelPay (backed by the military-owned telecom Viettel). The government's VietQR interoperability mandate, which has unified QR payments across 2.1 million merchants, has been a structural tailwind for adoption but also reduces the switching cost advantage that any single wallet player can build.

OVO (Indonesia)

OVO is arguably the most structurally interesting e-wallet in Indonesia. It was originally launched by the Lippo group (one of the largest real-estate conglomerates in Indonesia). It was then adopted by Grab as its Indonesian payments wallet in 2018 after Grab was unable to secure its own e-wallet license from Bank Indonesia.

In 2018, Grab invested in OVO, garnering roughly 40% share in the business. In 2021, it increased its stake to over 90% by purchasing shares from PT Tokopedia and Lippo Group.

OVO’s strategic significance lies in its integration with Superbank, the Indonesian digital bank backed by Grab, Emtek, Singtel and KakaoBank. In May 2025, OVO launched OVO Nabung by Superbank, a product that embeds a regulated bank savings account inside the OVO e-wallet. Users earn 5% annual interest on their balances with no minimum or fees, and can seamlessly use those balances for daily transactions. The product crossed one million users within five months of launch. Users who upgraded to OVO Nabung saw their average balances double and transaction frequency increase by 60%. One in three Grab driver-partners now uses OVO Nabung as their primary wallet and savings tool.

OVO Nabung creates a closed loop where OVO wallet users earn bank-level yield on their balances while Superbank gets sticky deposits with minimal acquisition cost, which it can then lend against. Superbank itself turned profitable for the first time in FY2025 (net income of 99.7 billion rupiah / ~$5.9M), with loans growing 50%, NIM of 10.64%, and gross NPL of just 2.6%. The cost-to-income ratio collapsed from 139% to 70.5% in a single year.

By end-2025, OVO had reached 121 million downloads and 3 million QRIS merchants across more than 800 cities and regencies. Over 40 million QRIS transactions were processed through the Grab ecosystem in 2025, with QRIS adoption growing 61% year-on-year across OVO's merchant base. More than 700,000 SME merchants saw transaction volumes increase by 35% through digital adoption.

Indonesia's QRIS system has been a structural tailwind for the entire wallet ecosystem. Bank Indonesia data shows QRIS is now used by nearly 60 million users across more than 40 million merchants (mostly SMEs), with transaction volumes growing 162.7% year-on-year as of July 2025. Gen Z accounts for 28% and millennials for 26% of total QRIS users.

The key question for OVO is whether the Superbank integration can scale fast enough to establish a deposit-funded lending flywheel before competitors catch up. GoPay is integrated with Bank Jago (GoTo's digital banking partner). ShopeePay has Monee behind it. Dana has the Sinar Mas banking relationship.

Indonesia's 277-million person market is large enough to support multiple winners, but the wallet that converts the most users into depositors and borrowers first will have the most defensible position. OVO's early traction with OVO Nabung suggests it is ahead on this metric but I believe this race is far from over.

GoPay (Indonesia)

GoPay is the fintech arm of GoTo Group, formed from the merger of Gojek and Tokopedia in 2021. It is the most direct competitor to OVO in Indonesia, and alongside ShopeePay, one of three wallets with a captive SuperApp ecosystem in the country.

GoPay launched in 2016 as a payments solution for Gojek users and driver-partners. It has since spun out into a standalone app (launched 2023) designed to reduce data usage and reach mass-market users with less powerful phones.

The standalone GoPay app has seen a growth inflection point, monthly transacting users reached 24.2 million in Q3 2025, up 29% year-on-year, and GoTo surpassed 500 million transactions in a single month for the first time in September 2025. By Q4 2025, digital payments volume hit IDR 120 trillion (~$7.5B) for the quarter.

It also has a relatively large lending business. GoTo Financial's consumer loan book expanded rapidly through 2025, reaching IDR 7.6 trillion (~USD $457M) by Q3 2025, up 76% year-on-year, with management guiding to exceed IDR 8 trillion (~USD $480M) by year-end. For the full year, GoPay's Fintech segment achieved Adjusted EBITDA of IDR 497 billion (~USD $30M), its first full year of profitability. Lending revenue grew 130% year-on-year to IDR 879 billion (~USD $53M) in Q2, and 84% year-on-year to IDR 1.0 trillion (~USD $60M) in Q3. Roughly 60% of loans outstanding originate through the GoPay and Gojek apps, with those in-ecosystem channels growing faster than third-party platforms.

The TikTok partnership has added an unexpected distribution channel. After TikTok acquired 75.01% of Tokopedia in late 2023, GoPay became embedded in the TikTok Shop checkout flow. GoTo launched GoPay Pinjam (instant cash loans) directly within TikTok Shop in 2025, making it the first platform in Indonesia to offer cash lending inside the TikTok ecosystem. BNPL on TikTok Shop and Tokopedia has shown strong momentum, and the partnership with Telkomsel (Telkomsel Wallet by GoPay, embedded in the MyTelkomsel app) further extends distribution.

GoTo holds a 22% stake in Bank Jago, an Indonesian digital bank that serves as GoPay's banking partner. The GoPay Tabungan by Jago product, launched in late 2023, embeds a Bank Jago savings account inside the GoPay and Gojek apps, mirroring the OVO Nabung by Superbank model. Users can open an account in two minutes, earn interest on balances, and use them seamlessly for payments across the GoTo ecosystem and all QRIS merchants. GoTo has also launched GoPay Asuransi (insurance), GoPay Simpanan (investments), and GoPay Pinjam BPKB (collateral-backed loans) on the consumer app, progressively building a full financial services stack.

GoPay turned profitable on an Adjusted EBITDA basis for the first time in FY2025, reaching IDR 497 billion (~USD $30M) for the full year. Financial services revenue nearly doubled in 2024 to IDR 3.7 trillion (~USD $230M). GoTo itself posted its first pre-tax profit in Q3 2025 (IDR 62 billion / ~USD $3.4M) and raised its FY2025 Adjusted EBITDA guidance to IDR 1.8-1.9 trillion.

GoTo's fintech segment is arguably the most under-followed listed fintech asset in the region, given that most international investor attention goes to Sea Limited and Grab. Unfortunately, I do not think GoTo as a whole is investable, due to the declining ride-hailing and food delivery business that makes up a large majority of group revenues.

DANA (Indonesia)

DANA is a digital financial services business based in Indonesia that was founded in 2017 as a joint venture between Emtek (one of Indonesia’s largest media conglomerates) and API Investment Limited, an investment arm of Ant Group. It launched in 2018, later than competitors such as GoPay and OVO but has since built scale.

It first got its start through being deeply integrated with Bukalapak (Emtek-backed Indonesian e-commerce player) and Lazada (Alibaba-owned). In 2022, Lazada purchased $304.5M of DANA shares from Emtek and Sinar Mas Group invested a further $225M to make it one of the largest shareholders.

DANA claims to have over 200M registered users today and as of 2023, processed an average of 10M transactions each day. DANA’s structural challenge is that it lacks a captive ecosystem. GoPay has GoTo (Gojek + Tokopedia) while OVO has Grab, and ShopeePay has Shopee. DANA’s e-commerce partners have either shut down or are not exclusively tied to it. This makes DANA the most exposed of each of Indonesia’s major wallets to the commoditising effect of Indonesia’s QRIS interoperability mandate, which requires all wallets to accept a unified QR standard across over 40 million merchants. (When every wallet works everywhere, wallets with the weakest ecosystem lock-in will be the most vulnerable)

That said, the Ant Group and Sinar Mas backing gives DANA optionality. For instance, if DANA can integrate with Bank Sinarmas for deposit-funded lending (similar to the OVO-Superbank model), it could transition from a pure-play payments wallet into an embedded finance player.

Competitive Landscape

Looking across these players, I believe there is a clear distinction between some of them. The most useful lens to view them is not by country or product vertical as these can easily change overnight, rather I believe it is best viewed through structural origin.

Where these companies originated and their backers, determines the data they have access to, the distribution they can leverage and ultimately what kind of moat they can build.

When comparing across this list, there are a few insights that I believe we can takeaway.

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However, the stock has since been hit hard from a combination of factors including a Crypto bear market and general drawdown in the AI/Datacenter space over concerns of an overbuild.

It now trades at $18, seeing a 60% drawdown from all-time highs over the past 6 months. It also means my position is now down 25%.

In this piece, I will give an update of my thoughts on Galaxy as an investment and my plans moving forward.

Read more

S&P 500: -5.25%
NASDAQ: -5.08%

March was one of the most consequential months for markets in recent memory. The US-Israeli operation against Iran, launched in the final days of February and escalated throughout March. Stocks opened the month in free fall as futures plunged on the first Monday of March. By month end, the S&P 500 had posted its fifth consecutive weekly loss, the longest losing streak since 2022, and was sitting nearly 9% below its January all-time high. The Nasdaq entered correction territory, falling more than 12% from its high.

The result of the operation was an oil surge while almost everything else sold off. Brent crude topped $108 per barrel and WTI breached $94 by the final week of the month, as concerns over the Strait of Hormuz disrupting global tanker flows sent energy stocks ripping higher. Energy is the only positive S&P 500 sector this year, up over 30% year to date. Meanwhile, tech heavyweights have been hit hard. Nvidia is down 12% YTD, Microsoft down 24% YTD. Google, seen as the AI leader, is down over 13% YTD. Meta had an especially rough stretch, dropping 12% in three days on the back of layoffs across Reality Labs and Facebook, combined with two separate jury verdicts finding Meta legally responsible for harm to minors through its social media platforms.

The macro picture has darkened considerably. The OECD raised its US inflation forecast to 4.2% for 2026, well above the Fed’s own 2.7% projection. The word “stagflation” has returned to mainstream financial commentary, and could be a persistent worry for the rest of the year.

There were moments of reprieve as markets reacted to various moments of Trump’s infamous TACO (Trump always chickens out). Trump suggested in a Truth Social post that the US and Iran had engaged in “productive” talks, which sparked a sharp relief rally mid-month. However, the optimism was short-lived. By the final days of March, oil was climbing again, the Strait of Hormuz remained a flashpoint, and China opened a trade probe against the US in retaliation to tariffs, adding another layer of uncertainty.

In my view, each subsequent TACO has diminishing returns, and the markets are certainly showing it.

March was yet another brutal month for investors, and I will be discussing my plans moving forward in the following article.

Portfolio Performance (Since Inception)

(Portfolio Inception Date: 27th October 2023)

Portfolio: +143.63%

S&P 500: +53.33% (Outperformance: +90.30%)

NASDAQ: +68.09% (Outperformance: +75.54%)

Portfolio Performance (YTD)

Portfolio: -18.07%

S&P 500: -7.33% (Underperformance: -10.74%)

NASDAQ: -10.40% (Underperformance: -7.67%)

Portfolio reviews are exclusively for paid subscribers. If you would like to gain access to my portfolio holdings, deep dives, and tons of other articles, do consider subscribing.

I post several articles per month, ranging from extensive 50-60 pager deep dives on the most interesting businesses I can find, to shorter articles on valuations, market musings and specific verticals/geographies.

In the past month, I’ve shared these articles with subscribers:

Free subscribers get access to posts too, of course, with free earnings reviews and occasional articles.

In the next few segments, I discuss my general thoughts on the market, portfolio companies, performance, portfolio allocation and portfolio changes.

General Thoughts on the Market & Performance

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One of the key criticisms I've had of the business was the $6B cash pile that they sat on for over a year. This, while the business continues to generate excess free cash flow each quarter (expecting about $450M in Adj. FCF in FY26).

However, in the past 6 months, they have started deploying this capital aggressively. In late 2025, they went on an AV investment spree, a $60M initial investment into Vay (with potential follow-on of up to $350M), and undisclosed investment dollars into WeRide, May Mobility and Momenta. In Feb this year, they announced the purchase of Stash Financial for $425M, and just last week, an all-cash $600M deal for FP Taiwan.

Even after all of this, Grab still sits on $5.4B in net cash as of December 2025. They're deploying aggressively, but from a position of overwhelming balance sheet strength, not levering up.

We also found out that the FP Taiwan deal was in discussions for 9 months. That means conversations likely started around June/July 2025, roughly the same time the AV investment spree kicked off. The capital allocation engine has clearly been turned on.

I would not rule out a potential deal for GoTo in the near future.

Let’s also forecast the effect of a GoTo deal. Currently, GoTo has a ~31% market share in the food delivery market in Indonesia. Hence, it would give Grab a 77% market share post-deal, dwarfing the 23% held by ShopeeFood. Gojek also has a ~40-50% market share in Indonesia. A deal would therefore give Grab an absolute monopoly in the largest SEA market.

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Revenue: $337.9M v $296.1M est. (+65% YoY, +69% FX-Neutral) 🟢

Adj. EBITDA: $78.4M v $76.9M est. (+38% YoY, +9% QoQ) 🟢

GAAP EPS: $0.18 v $0.18 est. (+87% YoY, +7% QoQ) 🟢

Selected Key Metrics

Again, dLocal saw YoY and QoQ growth across all 6 key metrics. Management also added a new metric that they will be disclosing (operating profit). On that basis, operating profit grew by 48% YoY.

• TPV: $13.1B (+70% YoY) ✅

• Revenue: $338M (+65% YoY) ✅

• Gross Profit: $116M (+38% YoY) ✅

• Adj. EBITDA: $78M (+38% YoY) ✅

• Net Income: $56M (+87% YoY) ✅

• Adj. FCF: $65M (+100% YoY) ✅

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2025 as a whole

dLocal accelerated growth across its key metrics, and have grown operationally too. They now hold 37 licenses across 6 markets, adding 4 in 2025, with a further 16 applications in process.

APMs continue to grow and now represent the majority of EM e-commerce volumes. dLocal also now offers a full suite of stablecoin solutions to merchants, while it is collaborating with all the major agentic payment protocol builders to ensure its merchants are able to process agentic payment mandates.

dLocal has a TPV retention rate of 158% with existing merchants clearly seeing the value in the business. However, it is notable that new merchants accounted for a negligible amount of TPV. It appears that dLocal has largely acquired all the merchants it possibly can.

Still, management has called out that it is still only at <2% of its TAM and ~10% of its current merchants. It also expects this TAM to double in 5 years.

Market and merchant concentration has also fallen slightly year over year, although the numbers remain elevated. Ultimately, this is likely to continue being a concern as large merchants are likely to grow faster than smaller ones.

Table of Contents

1. Introduction

2. Financials

3. Guidance

4. Product Development

5. Management Commentary

6. Concluding Thoughts

1. Introduction

dLocal is a Latin American-based company that facilitates payment flows for businesses ranging from small startups to large conglomerates on a B2B basis, specifically targeting underserved emerging markets.

It thrives in complex payment environments, which are currently a huge tailwind for the business. Effectively, dLocal is a capital-light “toll bridge” business.

dLocal was first pitched to subscribers in July 2025 at $10.98. It has seen volatile stock price performance since but remains a positive returner at this stage.

2. Financials

There are 2 primary metrics to track for dLocal.

The first is total payment volume (TPV). This tracks the total monetary value of all transactions processed through a company’s platform.

The second is take rates. This determines the amount of revenue generated from TPV, which ultimately affects profitability of the business.

Summing it up, we get gross profit, which I perceive as the true top-line of the business. TPV and take rates viewed in isolation are pretty much useless.

Total Payment Volume

• TPV was up 70% YoY and 26% QoQ.

• This marked the 6th successive quarter of acceleration in TPV. At the current scale of $13.1B in TPV, this is not an easy feat. IMO, this is very very impressive and shows the clear inflection since Pedro joined.

• In Q4 2025 alone, TPV on a QoQ basis grew by more than the prior 3 quarters combined.

Gross Take Rates (Revenue/TPV)

• Gross take rates for the quarter were 2.58%, a 13bp decrease QoQ and 7bp decrease YoY.

• Again, this is part of parcel of running a payments business. As TPV increases and customer relationships deepen, factors such as custom pricing negotiations, increased competition, shift in payment mix, and operational efficiencies will affect take rates.

• Most importantly, we have to look at the net effect of rising TPV and decreasing take rates.

Net Take Rates (Gross Profit/TPV)

• Net take rates are arguably more important than Gross take rates as they take into account other costs that dLocal has to pay, such as network fees, partner fees and revenue sharing fees.

• It details exactly how much dLocal keeps after all these fees.

• Net take rates came down yet again this quarter, falling to 0.88%, an all-time low.

• Again, this should not be a surprise. It is clear that dLocal is prioritising TPV growth and that will come with margin compression.

Gross Profit

• dLocal’s gross profit continued to grow, up 38.4% YoY, reflecting the increase in TPV, despite the reduction in net take rates.

• Ultimately, this will determine dLocal’s long-term profitability and sustainability of its business model. Increasing gross profit dollars is the number 1 priority of the company, and the only way to do so is by increasing TPV or increasing take-rates.

• The latter is near impossible, but prioritising TPV will enable higher-margin services in future that could supplement the drop in margins.

3. Guidance

dLocal has guided for 50-60% YoY growth in TPV for 2026, compared to 59.1% in 2025. Pedro and Co. have sandbagged massively in previous quarters and I expect TPV to come in at the higher range of this guidance.

Gross Profit growth is slightly light, at just 25% at the midpoint. This is compared to 36.7% in 2025. Management noted that this is due to dLocal’s scale and long-term merchant relationships that will inevitably lead to more favourable terms for merchants.

Operating Profit, which is a new metric used by dLocal, is expected to grow 30% at the midpoint.

dLocal also expects new countries to contribute more to the growth of its TPV in % terms in 2026, with significant upside in Africa and Asia.

It also foresees more new merchants in 2026 across high-growth verticals such as Crypto, Travel and Gaming. New products are expected to contribute slightly towards TPV growth, in areas such as BNPL, merchant of record, virtual accounts and card-present.

Buyback and Dividend

dLocal also announced a $300M buyback plan supplementing the previous dividend plan that was shared. Last year, dLocal announced that 30% of the previous year’s Adj. FCF will be returned to shareholders.

The confirmed number is $57M which equates to $0.1939 per share (subject to adjustment according to number of shares outstanding as of record date). This equates to about a 1.6% dividend yield. Furthermore, the $300M buyback will equate to over 8% of shares outstanding.

This is a business that is highly cash generative with massive operating leverage to come.

4. Product Development

dLocal has prioritised its stablecoin infrastructure in 2025, and has made collaborations with some key players in the market such as Circle, BVNK, Fireblocks and Felix. Stablecoins are clearly a new innovation that will disrupt traditional payments, but dLocal appears well-positioned to participate at the bleeding edge.

It also announced BNPL Fuse which is now operational in 6 countries and scaling rapidly, with dLocal reporting 88% QoQ growth in 4Q25. Importantly, 93% of BNPL users are new customers, which means little to no cannibalisation of existing payment methods.

dLocal has also prioritised APMs through partnerships with DHL Express Brazil to automate Pix payments, Open English in Colombia, and Yape in Peru as some key highlights.

5. Management Commentary

On New Products

“Buy Now Pay Later fused products are now live across 6 countries with solid merchant adoption.

We've completed the launch of our full-service stablecoin suite, enabling merchants to on- and off-ramp fiat to stablecoins, settle and be settled in stablecoins and collect at checkout in stablecoins.

And we continue to add an ever-growing portfolio of APMs, a SmartAPM platform.”

On Stablecoins and AI Agents

“On stablecoins, we've offered a full suite of stablecoin solutions for merchants.

And on AI agents, a possible new frontier for commerce, we are collaborating with Google on the AP2 open standard for interoperable AI engine payments to ensure local payment methods across emerging markets are part of that infrastructure for the ground up.”

On Future Prospects and Take Rates

“Long term, we guarantee that we continue to be one of the scale leaders across emerging markets.

And we feel fairly confident that if you have the merchant relationship and you're processing for them, we will figure out ways to monetize those relationships and all that TPV.

So focused on TPV growth, focused on gross profit dollar growth and being scale leaders across emerging markets is what's implied in the guidance.”

On Prioritising TPV and Future Profitability

“If we have the TPV, we have the merchant relationships as our product portfolio widens, we have that TPV and those relationships to cross-sell new products and also to figure out different ways that we can help our merchants across the markets where we operate with them. So we continue to see take rate as an output metric.

The metrics we manage to our TPV growth which reflect market share, share of wallet and how our merchants choose.

Remember that TPV for us is revenue for our merchants and then be able to drive gross profit growth operating profit growth and earnings growth as a consequence of that sustained high level of compounding TPV growth.”

On 2026 Guidance

“Following a 2025 investment cycle, which has overhang into early 2026 as salaries and wages spend from '25 hirings gets annualized, we expect operating leverage acceleration to become evident more towards the second half of the year and then flow into the following year.”

6. Conclusion

Overall, I thought this was yet another fantastic quarter. Management has proven its ability to spur TPV growth.

Margins will continue to be an overhang, but I am optimistic that the market will change its mind once it realises that gross profit dollars are the true north star metric for the business.

Currently, dLocal is growing gross profit at 37% while trading at just 5.8x NTM EV/GP and 13.6x NTM P/E.

I believe the stock is very undervalued, and the market continues to underestimate the long-term sustainability of its business model and ability to generate operating leverage.

Several months back, I posted a full valuation model on dLocal, detailing my assumptions and stock price output.

The assumptions that I made for FY2025 have been surpassed:

TPV: $37.08B (est) v $40.8B (actual)

Operating Income: $200M (est) v $220M (actual)

Net Income: $164M (est) v $196M (actual)

At these prices, I foresee lots of upside to come. I’d encourage you to check it out.

To conclude, I have no idea when the market will re-price dLocal, but I do believe patience and a huge margin of safety will be rewarded eventually. dLocal is building a payments behemoth that is spitting out cash hand over fist and is entirely shareholder-friendly.

This is a business that I am happy to back.

Thanks for reading!

- Gab

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Fiscal AI

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Revenue: $377.7M v $342.3M est. (+46.3% YoY, +7.9% QoQ) 🟢

ARR: $1,460M v $1,441.5M est. (+33.6% YoY) 🟢

EPS (Non-GAAP): $0.04 v -$0.11 est. 🟢

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*Note that Rubrik’s fiscal year ends on January 21. In essence:

• FY2025 = Feb 2024 → Jan 2025

• FY2026 = Feb 2025 → Jan 2026

• FY2027 = Feb 2026 → Jan 2027

Selected Key Metrics

• 2,805 customers with $100K or more in subscription ARR, up 25% year-over-year

• GAAP Gross Margin: 82%, 6th consecutive quarter of increase

• NPS remains in the top 1% of SaaS businesses

Table of Contents

1. Introduction

2. Financials

3. Guidance

4. Management Commentary

5. Concluding Thoughts

1. Introduction

Rubrik is an American cloud data management and data security company based in California. It started as a challenger to traditional storage and disaster-recovery vendors, but has since evolved into a cybersecurity-driven data protection platform.

Rubrik helps companies to stay resilient against attacks and recover fast when disaster strikes, protecting enterprise workloads across on-premise, cloud, and SaaS environments.

Rubrik was first pitched to subscribers on 22 September at $80 following the earnings drop of 18% in Q2’26. This is the second earnings report since owning the business. Since the initial pitch, I’ve added to the position multiple times.

It is now my 6th largest position, just outside my 5 core positions in the portfolio. Let’s break down the earnings results.

2. Financials

Subscription ARR

This refers to the annual run rate from subscription contracts. For Rubrik this is the core recurring business coming from Security Cloud subscriptions, SaaS protections, and legacy subscription contracts tied to appliances or software. It excludes one-time services and hardware sales, so it is the cleanest signal of recurring scale.

Rubrik’s subscription ARR for Q4 2026 came in at $1.46B, up 34% YoY. Growth has understandably slowed in recent quarters as per the law of large numbers.

That said, it is good to see that growth has somewhat stabilised. If Rubrik maintains its subscription growth rate above 30%, it would be massively encouraging.

Cloud ARR

Cloud ARR isolates the portion of subscription ARR coming from Rubrik’s cloud native products, principally Security Cloud and other SaaS protections. This is the revenue that validates Rubrik’s move from on-prem backup into cloud first security services.

Cloud ARR this quarter came in at $1.293B and grew faster than total ARR again (48% v 34%). This is a strong sign for Rubrik that customers are buying the cloud offering at scale and that the cloud portfolio is driving a majority of the company’s growth.

Again, this is key as cloud ARR typically has better land-and-expand mechanics and lower cost-to-serve over time. This leads to higher margins moving forward.

Average Subscription Dollar-Based NRR

Rubrik has not disclosed its exact NRR but has maintained >120% NRR for the nth consecutive time. Since disclosing this metric from the S-1, it has never went below 120%. This is a key indicator of strength for the business as it implies existing customers are expanding well beyond what is lost to churn.

Customers with $100K+ in Subscription ARR

Another key indicator is the number of high-value customers where Rubrik is most likely to land strategic, high-value contracts. For Rubrik these are the accounts most likely to be mission critical and to adopt multiple modules.

As of Q4, Rubrik has 2,805 customers with $100k or more in subscription ARR, up from 2,085 last year. This represents 25% YoY growth, which is a slight drop from prior quarters numbers but is to be expected with the law of large numbers.

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3. Guidance

Rubrik’s management are notorious sandbaggers. They’ve guided for a midpoint revenue of $366M in Q1 2027, which implies 31.4% YoY growth. I expect the actual numbers to come in materially higher.

For FY2027, management has guided for subscription ARR of $1.834B and total revenue of $1.602B which would imply 45% and 21.7% growth respectively. While these numbers are sandbagged, it still feels rather low to me at 21.7% (normalising for material rights, ~27-28%), considering FY26 growth came in at 48.4%.

Q4 saw a weighted-average shares outstanding of 200.8M, and it is expected to continue climbing to 204M in Q1’27. For FY27, Rubrik is guiding for weighted average shares outstanding of 232M. That would represent 15.4% growth in shares outstanding.

That represents massive dilution incoming, albeit largely priced in by the market.

*The stock compensation plan first set out by management was planned pre-IPO and with many stock price targets hit in 2024/2025. This accounts for ~15.5M additional shares. If we consider just new SBC alone, the number is closer to 6M shares. At a base of ~200M, that is about 3% dilution, which is rather palatable.

This remains one of the key risks for shareholders.

4. Management Commentary

On Rubrik’s Core Value Proposition

“Rubrik is the system of record of last resort around data and identity when a large bank or hospital faces a ransomware attack. Data infrastructure and recovery capabilities are foundational to enterprise resilience.

Our platform is built through more than a decade of engineering and enterprise feedback. This technology foundation allows organizations to restore business operations quickly when cyber incidents occur.”

On Vibe Coding & LLMs

“You can close the windows and put on the locks, but ultimately, you need a bunker underneath your house to survive the doomsday, so your cloud and AI transformation journey continues uninterrupted. Rubrik Security Cloud is that bunker for enterprises. When ransomware inevitably hits, a LLM or Vibe code will not recover your business, Rubrik will.”

On Rubrik’s Identity Protection Product

“We have been rapidly disrupting the identity protection market. In just a few quarters this business grew to more than 900 customers, making it the fastest-growing product in our company’s history. In Q3, we had reported that we had crossed 400 customers.

Protection for Okta Identity allows Rubrik to span Okta, Active Directory, and Entra ID. Identity infrastructure has become a primary target for cyber attackers.”

On Rubrik’s Competitive Positioning

“Our competitive win rates exceeded 90% in the fourth quarter. Customers are increasingly turning to Rubrik to accelerate AI transformation while strengthening cyber resilience. Organizations can begin with data protection, cloud security, or identity resilience and expand across the platform over time.”

On Rubrik Agent Cloud

“Last quarter, we shared that Rubrik Agent Cloud was in beta. Just a few weeks ago, we made Rubrik Agent Cloud generally available. And we have a number of POCs ongoing across early AI adopters as well as Fortune 500 companies. While we are still in the early innings of multiyear effort to scale our Rubrik Agent cloud suite, we believe that we are building the most consequential security and AI operations company for the AI era.”

Bipul on the 3 Key Takeaways

“First, Rubrik is winning the cyber resilience market across data and identity. Second, we have accelerated our business growth while the competition has stalled. And third, we are defining the enterprise AI market with our unique and differentiated agent control and guardrail solutions.”

On Rubrik’s Competitive Advantage over Legacy Vendors

“My belief is that the traditional cybersecurity companies, or people in those cybersecurity companies will not be suitable for this market because traditional cybersecurity is all about rule-based platform, and they’re not in the real-time control of action. This market is about dynamic control. And you need to bring an AI to control agentic actions. And AI requires model engineers. And most of the cybersecurity company, probably none of the cybersecurity company or these start-ups have any model engineering.

We brought Predibase to solve this problem. We believe we have a unique solution to control agentic action with AI to really drive intent-based understanding of action and stopping it.”

5. Concluding Thoughts

Rubrik delivered a strong Q4, outperforming estimates as expected. Revenue grew 46% YoY and 8% QoQ, a slight deceleration, but nonetheless very strong results.

Whether Rubrik can maintain these high growth rates will depend on the adoption of its new offerings such as Identity Resilience and Agent Cloud. It will take time for these to move the needle, but they do have the potential to be much larger contributors to revenue over the long term.

In the past 3-4 months, Rubrik stock has seen a ~50% drawdown following the impressive earnings beat in Q3. This can be attributed to 2 main reasons: firstly, the fear of software disruption that has wiped out trillions in market cap and secondly, the broader market drawdown in high-growth stocks amidst worries of stagflation and recent Iran-Israel-US conflict.

On the fear of software disruption, I’ve had my say in recent months on where I foresee this going. I believe there is a very real risk of replacement across hundreds to thousands of software businesses who provide non-mission critical software services. This does not include Rubrik.

In fact, Rubrik appears likely to benefit from the proliferation of AI, LLMs, and vibe coding. In an Agentic era, Rubrik’s services will be in greater demand. What gives me confidence, is that Rubrik is a founder-led, young business that is hungry for success. In my view, this is the key determinant in which a winner is to be picked for the coming decade.

There are certainly risks to be had with regard to Rubrik. Firstly, stock-based compensation and the resulting share dilution is a real dampener on shareholder returns. That said, the pre-IPO compensation plans should come to a head by the end of the new fiscal year. While SBC remains 22% of revenue today, it has come down massively since IPO.

The second major risk in my view, is the ability for Rubrik to become a truly differentiated platform business in cybersecurity. Currently, it remains a backup-focused business. While their new products such as Identity Resilience and Agent Cloud are exciting, they still remain niche products and not a needle-mover.

The third major risk is the ability for these new products to support the growth trajectory that will inevitably falter as Rubrik takes a larger stake of the backup market.

At this point, it is clear to see that Rubrik is a market leader in this rather niche space. That means it is a big fish in a small pond. Now as it graduates into a larger pond, it will have to ensure it remains a big fish.

This quarter reinforces my confidence in the business. Bipul and Co. are clearly moving in the right direction. My thesis remains that Rubrik can be a massive player in multiple growing markets within cybersecurity. Despite fears by the market, cybersecurity remains rooted in a multi-decade tailwind and there is no other sector in SaaS that I would rather be invested in.

Thanks for reading!

- Gab

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Food delivery is the foundation of it all, and the largest by far at the moment. It is a $23B market today which will grow to ~$35B by 2030. On-demand grocery and daily essentials is a largely untapped opportunity at the moment that could grow to ~$18B by 2030. Non-food instant retail will add a further $12B or so.

Together, these three layers represent a $65B quick commerce market by 2030, roughly 3x the size of the food delivery market today.

Grab is the only platform with an existing operational footprint across all three layers, but its current share of the grocery and non-food prize is negligible. To capture the opportunity, it will require a major supply-side buildout.

This report will examine each layer of quick commerce, Grab’s current position, the investments required to make it happen, and what the economics look like if Grab executes to a tee.

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In case you missed the deep dive on the quick commerce landscape in China and Southeast Asia, do check out the free article linked below:

It is a 15,000 word article written in collaboration with where we go through exactly why quick commerce is being competed over fiercely by major players across China and Southeast Asia.

1. The $65 Billion Market

The defining structural insight about quick commerce in Southeast Asia is that it is not a single market with a single competitive dynamic. Instead, it is three distinct demand pools, each at a different stage of maturity, different unit economics and each requiring a different set of merchant and infrastructure capabilities.

Yet, all three can, in principle, be served by the same on-demand rider network.

This is the strategic logic behind quick commerce as a platform play. Achieving sufficient density in food delivery means solving the hardest infrastructure problem. Specifically, a platform will need a highly-liquid, city-level rider network with excellent demand forecasting and merchant relationships. Both groceries/daily essentials and non-food instant retail rides on that existing network at no marginal cost. That is the beauty of this quick commerce opportunity.

For Grab, it is crucial that they treat food delivery as the foundation of this journey, not the destination.

These are the 3 layers and how I define them:

• Layer 1: Food Delivery

  • This refers to prepared meals (food & beverage) delivery, and as of 2025, GMV is projected to be ~$23B according to Momentum Works. Grab owns ~55% of the market.

• Layer 2: Grocery & Daily Essentials

  • This refers to services like GrabMart, PandaMart and RedMart that offers same-day delivery of groceries and daily essentials. GrabMart is ~10% of GrabFood as of Q4 2025, implying a bottom-up estimate of ~$3B in market size for this business. (Noting that RedMart for instance, has no food delivery segment and therefore is incremental to this number)

• Layer 3: Non-Food Instant Retail

  • Non-food instant retail is the smallest layer today and encompasses FMCG products, personal care and beauty, OTC pharmaceuticals etc…

  • This segment currently accounts for over 40% of China’s total quick commerce market today. With how nascent this space is in Southeast Asia, I would give an estimate of ~$2B for this segment, although there is massive room for growth.

2. Layer 1: Food Delivery

Food delivery is the most mature of the three layers and the one where Grab maintains dominance. Grab currently has ~55% market share across Southeast Asia and is the closest equivalent to Meituan in the region, a platform in China that has leveraged food delivery to build a massive logistics and consumer internet business that is now fuelling their quick commerce charge.

For Grab, food delivery is not primarily about market share gain. Rather, it is about continued category expansion with more restaurants, more cuisines, more price tiers, and deepening the habit across its user base.

In terms of the financial profile for this segment, Grab has a take rate of ~20-30% on restaurant GMV with delivery fees partially passed onto consumers. Grab’s model is therefore to monetise the movement of goods and skim a small take from each transaction. Grab also offers sponsored listings, promotional campaigns and other merchant services that provide visibility. In return for this, restaurants on GrabFood get access to millions of active users with intent to order. Grab also handles payment processing, fraud risk, chargebacks and cash float.

Overall, this is not a high-margin business in isolation. But it is the very foundation on which quick commerce will be built and the engine that keeps riders deployed, demand predictable and the platform within the consumer’s daily habit loop.

3. Layer 2: Grocery & Daily Essentials

Online grocery in Southeast Asia is one of the most structurally under-penetrated categories in digital commerce. Across most SEA markets, online grocery accounts for low single digits of total grocery retail spend, compared to 10-15% in mature markets like South Korea, Japan and the UK. In fact, it is ~25% in China.

I believe the gap between current penetration and mature market benchmarks represent the bulk of the layer 2 opportunity.

The reason behind the low penetration rates really boils down to a few key reasons. One, consumers in Southeast Asia who purchase groceries are typically the elderly who cook for their large multi-generational families. They are very skeptical over fresh produce quality and two, have the habit of frequenting their usual wet market spot where they can select items individually. Thirdly, the low basket sizes make delivery economics rather challenging without subsidies or subscription programmes.

However, these are challenges that can be overcome easily. For one, these constraints are likely to erode over time as consumer familiarity with on-demand delivery increases and as platforms invest in fulfilment consistency.

We’ve seen a similar story in China where food delivery became sufficiently habitual, and consumers began applying the same convenience expectation to adjacent categories. For example, a user who orders GrabFood daily may start asking why their shampoo, rice, or cooking oil is taking two days to arrive.

In 2022, the total grocery retail market in Southeast Asia was estimated at about $475B, growing 7% annually. That would imply a $622B market in 2026.

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By 2030, if online grocery penetration reaches just 8% of total grocery retail (which still implies a level lower than most developed Asian markets), that would imply approximately $60B in online grocery GMV.

The majority of this would likely still be fulfilled through next-day delivery or longer. In terms of instant/same-day delivery which would qualify as quick commerce, I believe a realistic number here could be 30%. If so, that would equate to this segment being worth $18B in 2030.

GrabMart is positioned to compete for a meaningful share of this through its layer 1 capabilities.

4. Layer 3: Non-Food Instant Retail

Non-food instant retail is the smallest layer today but the fastest growing. It encompasses FMCG products, personal care and beauty, over-the-counter pharmaceuticals, baby and pet care, consumer electronics accessories, and eventually a broader range of lifestyle and home products.

In China, Meituan’s Flash Shopping non-food service grew to over 10 million daily orders by Q3 2024, with peak daily volumes reaching 25 million by August 2025. Non-food now accounts for over 40% of China’s total quick commerce market by value.

In SEA, the non-food quick commerce market is still very nascent. Consumer behaviour has not yet shifted to treating on-demand non-food delivery as a default channel. I believe there are a few constraints for this. Firstly, on the supply-side, brands and retailers have not yet positioned inventory close enough to consumers to make 30-60 minute non-food delivery economically viable across a broad SKU range.

As a reminder, the SKU range for non-food retail is 100x or more the size of food delivery.

The e-commerce market is estimated to be worth $359B in 2030. I believe it is fair to assume that about 3-5% of that could become eligible for same-day or instant fulfilment in dense urban areas within the region.

Assuming we do reach the higher end of that range by 2030, it would represent about $18B in GMV.

5. Grab’s Position Across All 3 Layers

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EPS: $0.63 v $0.62 (+61.5% YoY) 🟢

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Selected Key Metrics

Total Gross Profit: $3.0B (+36% YoY)
Total Net Income: $410.88M (+72.9% YoY)
Total Adjusted EBITDA: $787.14M (+33.2% YoY)
Cash & Cash Equivalents: $11.1B (up from $10.4B in Q4 2024)

E-Commerce (Shopee)

Gross Orders: 4.0B (+30.5% YoY)
GMV: $36.7B (+28.6% YoY)
Revenue: $5.0B (+35.8% YoY)
Adjusted EBITDA: $202.5M (+33% YoY)

Digital Financial Services (Monee)

Consumer & SME Loans Outstanding: $9.2B (+80.4% YoY)
Revenue: $1.13B (+54.3% YoY)
Adjusted EBITDA: $263.1M (+24.7% YoY)

Digital Entertainment (Garena)

Bookings: $672.4M (+23.8% YoY)
Revenue: $701.0M (+35.1% YoY)
Adjusted EBITDA: $363.8M (+25.6% YoY)
Quarterly Active Users: 633.3M (+2.5% YoY)
Quarterly Paying Users: 58.0M (+15.0% YoY)

Sea Limited beat on the top and bottom-line, though consensus estimates for the bottom-line range widely due to the lack of sell-side coverage on the stock.

As I’ve discussed often, my base case is >20% growth for the decade to come. I don’t see any signs of it slowing so far. In Monee, Sea has a business that is now reaching scale to move the needle. Shopee is not slowing down either with 25% GMV growth guidance and Garena guiding for double-digit growth again.

In this piece, I will break down the full report, earnings call and discuss my personal thoughts on the quarter.

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Table of Contents

1. Shopee (E-Commerce)

2. Monee (Digital Financial Services)

3. Garena (Digital Entertainment)

4. Management Commentary

5. Concluding Thoughts

1. Shopee (E-Commerce)

Shopee’s GMV continued climbing to record highs, with GMV now at an annualised $146.8B run-rate. Sequentially, GMV grew 14% QoQ, compared to 4% QoQ in Q2 2025 and 8% QoQ in Q3 2025, signalling yet more acceleration in the business.

For FY2026, Shopee is guiding for 25% GMV growth. This was above sell-side consensus of 19%, which is obviously great news. Personally, I thought management would guide for 20% GMV growth as they did last year (eventually raising to 25% mid-year and then closing the year at 26.8%), so I am very happy with 25%.

Shopee’s GAAP take rate continued to climb, up to 13.5% this quarter. This brings FY2025 take rate to 13%, up 60bp from FY2024. Again, this was expected, as I predicted in last quarter’s review.

There is still much more room for take rate to go up and I expect this to continue, albeit with some quarter to quarter fluctuation.

Of course, what concerned the market in particular in Q3 2025 was Adj. EBITDA margins for Shopee. This continued into Q4 2025, with 0.6% margins, compared to Q1 highs of 0.9%.

Management guided for “full year adjusted EBITDA no lower than that of 2025 in absolute dollar terms”. This spooked the market as that would mean 0.55% margins for FY2026, compared to sell-side analysts consensus at 0.9%.

Personally, I am of the belief that management is sandbagging guidance here. For instance, when we look back to Q4 2024 where management shared guidance for FY2025, here is what they said:

“We remain confident about our ability to continue delivering profitable growth in 2025 and expect Shopee’s full year 2025 GMV growth to be around 20%, with improving profitability.”

In actuality, top-line beat massively (28.6% v 20%) while Adj. EBITDA for Shopee actually grew 465% (slightly more than improving profitability).

Yet, a lot of this will depend on the rollout of the Shopee VIP program, the equivalent of Amazon Prime. Shopee has been re-investing heavily into their logistics network and anecdotally, I have noticed a very aggressive push for the VIP program. This could be leading to short-term margin pressure, which will continue for a quarter or two, hence the cautious guide.

Shopee Ads

In Q4 2025, ad revenue grew 70% YoY and ad take rate increased by over 80bps. Ad-paying sellers increased by over 20% YoY and their average ad spend increased by over 45% YoY.

Ads will be an increasingly large contributor to the bottom-line and I believe next year should be a key inflection point.

Shopee Logistics (SPX Express)

Management shared that SPX Express now processes on average over 30 million parcels a day. This ranks it 2nd in the region, behind J&T Express which is the key supplier for Shopee’s main rival: TikTok Shop.

Shopee has begun expanding instant delivery into additional use cases, including partnering with local supermarkets and suppliers to deliver fresh groceries in Thailand in as little as 1 hour.

Management shared that buyers using instant and same-day delivery spend around 15% more on average after adoption, this is to be expected as I have shared in the quick commerce deep dive.

“We scaled economical shipping to serve buyers seeking affordability. In Indonesia, orders using economical shipping more than doubled year-over-year in the fourth quarter. With our delivery capability well-scaled, we started to roll out fulfilment service in various markets across 2025. We are seeing encouraging adoption trends from both buyers and sellers, with double-digit order penetration in some markets. In 2026, we plan to expand fulfilment further across all our markets and aim to double our fulfilment order penetration by the end of the year.”

-Forrest Li, CEO of Sea Limited

Shopee VIP

In Q3 2025, management revealed that there were over 3.5 million Shopee VIP members, growing 75% QoQ. In Q4 2025, this went up to over 7 million members, implying 100% QoQ growth.

It is clear that management is prioritising Shopee VIP as a means of access to stable revenue/earnings and a sticky user base. I am fully in support of this, though it will likely lead to continued weakness in margins.

Management shared that across every market it has launched, the program has consistently produced double-digit spending uplift by members after joining and in Indonesia, VIP members have been spending 30-40% more than before joining. In fact, in some markets, VIP members already contribute to more than 15% of total GMV in Q4. This is massive when you consider it is just 1.75% of users.

There is still much room for growth re: the Shopee VIP program. Management shared that in 2025, Shopee served around 400 million active buyers. This implies that Shopee VIP is only at a 1.75% penetration rate. For reference, here are the take-up rates of other popular e-commerce subscription services:

• Amazon Prime: 65%

• Coupang Rocket WOW: 65-68%

• Walmart+: 43%

• Alibaba 88VIP: 5%

• JD Plus: 4-5%

There is huge variability here, with the likes of Amazon Prime, Coupang Rocket WOW offering many more services than just free shipping. However, it is clear that Shopee has huge runway to go.

Interesting to note too, is the synergy between Monee and Shopee in enabling a successful subscription business here. Chris Feng (President of Sea) noted during the call that historically, one of the core challenges for similar programs in the region, is the payment success rate month to month due to the lack of credit card availability. However, due to Monee, there is a smooth payment process for the VIP program, which has led to increase in subscription retention rate from 40% to 70% in Indonesia for instance in the past few quarters.

YouTube & Meta Partnership

In Q4 2025, orders driven by YouTube content more than tripled YoY. Since the launch in October, the collaboration with Meta has seen huge success, with more than 3 million affiliates linking their Shopee and Facebook accounts.

2. Monee (Digital Financial Services)

Monee continued with yet another record quarter of loans principal outstanding. Its loan book grew ~80% YoY to $9.2B while the NPL ratio held steady at 1.1%.

Management shared that they added 5.8 million unique first-time borrowers in the quarter, up from 5 million adds in the previous quarter. Monee now has 37 million active credit users, up more than 40% YoY. Average loan outstanding per user was ~$240, up 27% YoY.

GAAP revenue for the quarter came in above $1B for the first-time. Adjusted EBITDA continued climbing, albeit at a low margin, owing to interest rate declines in SEA markets.

Importantly, Sea is continuing to grow its off-Shopee SPayLater loan book, citing over 300% YoY growth, accounting for over 15% of the total SPayLater portfolio. For FY2025, Adj. EBITDA is now over $1B. Quite a feat.

There is a concerning aspect to Monee though. Off-book loans have barely grown for a year now. While on-book loans have grown from $5.1B to $8.2B YoY, off-book loans have only grown from $0.9B to $1B. (Off-book loans principal outstanding mainly refers to channeling arrangements, which is lending by other financial institutions on Monee’s platform)

Building off-book loans takes time of course, as 3rd party financial institutions will need a few things before they’ll commit capital again. For instance, a long enough default history across economic cycles, regulatory approvals in each individual market, and typically a minimum track record on the specific product.

Right now, Sea is essentially funding most of its loan growth off its own $11B cash pile. That works while the cash is abundant, but it's capital-intensive and creates a ceiling on how fast Monee can scale without either diluting shareholders or constraining other investments.

Long-term however, off-book loans will be key. It will enable Monee to keep growing without cannibalising the rest of Sea’s strategic optionality. Distributing credit risk to 3rd party institutions also acts as a structural hedge. The market will also likely re-rate Monee meaningfully the moment off-book becomes a material portion of the funding mix.

3. Garena (Digital Entertainment)

Garena had probably the weakest results of the 3 segments. Q3 2025 was certainly an anomaly in terms of bookings numbers. Bookings for that quarter came in at $841M, which was a massive increase over Q2. Q4 was more moderated, with a slight reversion to the mean as bookings came in at $672M. GAAP revenue hit a multi-year high of $701M.

Garena remains a very lucrative cash cow for the business.

QAUs fell to 633.3M which was the lowest for the year, albeit with a modest 2.4% increase over last year. QPU ratio fell to 9.2%, also the lowest for the year, but a full point above last year’s Q4 numbers.

4. Management Commentary

This section focuses mainly on questions during the earnings call, with key highlights of what I believe are important points to takeaway. I may adjust a few words here and there for clarity purposes, (English is not the first language for the majority of Sea’s management team) but I will not change the meaning of these quotes.

On Shopee’s GMV Growth:

“If you look back, at the start of 2025 we guided for around 20% top-line growth. As the year progressed, we realised we could grow the business faster and ended up delivering well above that. In Q4, year-on-year growth was much higher than 20%.

Over the year, we identified areas where we could further drive market growth and learned which levers we can pull to accelerate it.”

On Shopee’s EBITDA margins:

“I believe we can continue expanding profitability and margins, and that this trend will persist over the years. We have previously guided toward a 2–3% margin for the e-commerce business over time, and that conviction remains. We will continue to demonstrate this to the market.

Over the medium to long term, we see a 2–3% EBITDA margin as achievable, based on what we have observed so far.”

On the Competitive Landscape:

“Regarding the competitive landscape, what we have observed is a relatively stable environment across most markets. We have not seen anything materially different from what we observed in previous quarters.”

On Shopee Brazil:

“On AOV, we believe it will grow over time. The gap versus peers may remain, but we expect it to narrow gradually.

For SPayLater penetration in Brazil, it is still at a very early stage. While we have seen strong growth, we entered Brazil much later than other markets. Current penetration levels are comparable to the early stages we observed in our initial markets. We expect penetration to continue increasing in 2026, following a trajectory similar to what we saw in our Asian markets.”

On Garena:

“Regarding Garena’s outlook, we continue to expect double-digit growth in 2026.

On the collaboration pipeline, we are very encouraged by the strong performance of our partnership with IPs such as Naruto. We plan to extend this collaboration this year, with delivery currently targeted around Q3. We are also actively exploring additional IP partnerships.

In addition, this is a major football year with the FIFA World Cup. We see significant overlap between the global football community and our global gamer base, and we plan to launch a series of football-related promotions during the tournament period.”

5. Concluding Thoughts

This was far from a perfect quarter from Sea. As I write, the stock is down 23%.

My belief is that the guidance for Shopee Adj. EBITDA being flat for the year is the main culprit. That would imply Shopee Adj. EBITDA margin falling from 0.7% in FY2025 to 0.55% in FY2026. The market clearly doesn’t like it.

But I think this misreads what management is actually doing. At 1.75% penetration and already contributing over 15% of GMV in some markets, Shopee VIP is the priority. Investing in the infrastructure and incentives to make that program work costs money in the short term. Sacrificing profitability in the short-term is a clear choice to build the sticky, recurring revenue base that makes the long-term margin target more durable.

The harder question is whether this is an offensive investment or a defensive one. Shopee is aggressively building out logistics and VIP at the same time TikTok Shop is scaling across the region. If the answer is "both," that's not necessarily a bad thing as the best moats are often built during periods of competitive pressure. It is a fair debate, and one worth monitoring over the next few quarters.

One thing that I guess some investors may be spooked about was the optics of the margin trajectory. Going from Adj. EBITDA margins of 0.2% in FY2024 to 0.7% in FY2025 was the narrative that brought many investors back to the stock. Guiding that back down to 0.55% disrupts that story, even if the underlying business is in better shape than ever. Management arguably could have communicated this better.

Personally, I’ve long said that I intend to hold Sea Limited for a decade. The path to 2-3% EBITDA margins, which I actually think is conservative, was never going to be linear. There will be quarters like this one, where the market punishes short-term optics while the business continues compounding in the background.

The top-line growth in Shopee of 25% is very pleasing to hear (ahead of 19% consensus), and shows a clear push toward growth over profitability for the year ahead. As management reiterated during the call, they have levers to pull on either side, and they can ultimately decide which to prioritise. The fact they are prioritising growth despite knowing the market will not like it in the short-term, reinforces my conviction that this is a long-term minded management team.

The main concern over the next year is that the stock lacks a clean catalyst to move higher while the margin overhang persists. In short, I believe this is a fantastic buying opportunity for the long-term investor.

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S&P 500: -1.35%
NASDAQ: -3.01%

February continued where January left off, volatile and unforgiving, particularly for technology and growth-oriented names. The month was defined by a handful of themes: sticky inflation rearing its head again (a surprisingly hot PPI print on the final trading day of the month spooked markets), mounting anxiety over AI's impact on the broader economy, and continued rotation into international equities as foreign markets trounced the US for the second month running.

The MSCI World ex-US index is now up roughly 9% year-to-date, a striking contrast to the S&P 500's flat performance and Nasdaq’s negative performance. Capital appears to be chasing cheaper valuations overseas, and a weaker dollar has only accelerated that dynamic.

On the corporate front, Jack Dorsey’s Block announced it would lay off over 4,000 employees (nearly half its workforce) sending a chill through the broader FinTech space, with a notable effect on Software too. The Netflix vs. Warner Bros./Paramount Skydance saga dominated headlines mid-month, with Netflix ultimately pulling back from its bid. Meanwhile, Trump’s reported nomination of Kevin Warsh as Fed Chair added another layer of uncertainty around monetary policy going forward.

Tech bore the brunt of February’s pain. Software names in particular remain deeply out of favour.

Portfolio Performance (Since Inception)

(Portfolio Inception Date: 27th October 2023)

Portfolio: +158.49%

S&P 500: +66.27% (Outperformance: +92.22%)

NASDAQ: +83.10% (Outperformance: +75.39%)

Portfolio Performance (YTD)

Portfolio: -13.04%

S&P 500: +0.49% (Underperformance: -13.53%)

NASDAQ: -2.39% (Underperformance: -10.65%)

Portfolio reviews are exclusively for paid subscribers. If you would like to gain access to my portfolio holdings, deep dives, and tons of other articles, do consider subscribing.

I post several articles per month, ranging from extensive 50-60 pager deep dives on the most interesting businesses I can find, to shorter articles on valuations, market musings and specific verticals/geographies.

In the past month, I’ve shared these articles with subscribers:

Free subscribers get access to posts too, of course, with free earnings reviews and occasional articles.

In the next few segments, I discuss my general thoughts on the market, portfolio companies, performance, portfolio allocation and portfolio changes.

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Over $2 trillion in market cap has been erased in a matter of weeks. What has been dubbed as the SaaS-pocalypse has led to a market wide drawdown.

The reason behind this sell-off has largely been attributed to one reason: AI coding tools like Claude Code and Codex by OpenAI have made it so easy to “vibe-code” software programmes that ultimately calls into question the long-term future of these businesses.

Apparently, the market seems to believe that anyone can “vibe-code” their very own Salesforce in a weekend, replacing the “per-seat” model that software companies tend to run on.

To be clear, I am of the belief that these coding tools will ultimately replace some software businesses. But if we look at this from a holistic view, we are not going to see sector-wide disruption.

As such, I believe this is one of the largest overreactions in public markets, on a similar level to the DeepSeek moment last year that catalysed a 40% drawdown in Nvidia, wiping out over a trillion dollars in enterprise value.

The truth is, the usefulness of SaaS platforms lie not in the structure of their product, but rather the customer data, integrations, switching costs, network effects and trust within organisations.

If there’s anything that is clear to see from this, the one way for investors to benefit today, is by owning beaten-down names that are extremely unlikely to be dis-intermediated by AI. Extra points if they get stronger through AI.

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Introduction

China’s quick commerce war has been years in the making, but it is only in the past 12-18 months that it has erupted into a full-blown, high-stakes battle between the country’s tech giants.

But what is quick commerce, and why is Alibaba, the world’s largest e-commerce platform, burning roughly $5 billion per quarter just to remain competitive?

Most importantly, why does this fight matter, and what lessons does it hold for markets beyond China, particularly Southeast Asia?

In this article, we’ll explore the current state of China’s quick commerce boom and how its situation might offer a glimpse into the future of the Southeast Asian market.

Table of Contents

1. Quick Commerce 101

   1. Why Quick Commerce is Inevitable

2. Quick Commerce in China

   1. Meet the Players

3. The Backstory of China’s Quick Commerce War

   1. Why JD Lit the Match

   2. The Convergence of Four E-Commerce Logistics Models

4. How the War is Being Fought

   1. JD’s Push into a New Logistics System

   2. Alibaba Joins the War

   3. Will Alibaba Succeed this Time?

   4. Meituan and Alibaba’s Competitive Advantage

5. The Current Status of the War

   1. GMV Market Share: Alibaba vs. Meituan

   2. China’s Food Delivery Unit Economics (Pre-War)

   3. China’s Food Delivery Unit Economics (Post-War)

      1. The Difference in Unit Economics

         1. Delivery Network

         2. Core Users of the Platform

6. What are they Fighting for?

   1. The Quick Commerce Market

   2. Traffic Spillover

   3. The Different Approaches of Alibaba vs. Meituan

   4. Quick Commerce Market in 2024

   5. What has Changed in 2025?

   6. What are the Limits of Quick Commerce?

7. The Next Stage of the War & Other Players

   1. AI Search & Qwen

   2. Regulators & Platform Subsidies

   3. China’s Quick Commerce Subsidies

8. What makes China’s Instant Logistics Special? How Do Platforms Aggregate So Much Volume?

   1. A Native Food Delivery Environment

   2. The Normalisation of Loss Leaders

9. How Platforms Are Innovating

   1. Innovation on the Supply Side

      1. Pinhaofan (拼好飯)

   2. Innovation on the Demand Side

      1. Shenqiangshou (神抢手)

      2. God Coupon (神券)

   3. Innovation on the Rider Side

      1. The Four Main Delivery Models

10. The Infrastructure Layer

    1. Meituan’s Initiatives and Micro-Warehouses

    2. Micro-Warehouses

    3. Micro-Warehouse Types

       1. General Merchandise

       2. Specialised Warehouses

       3. Brand Warehouses

    4. Meituan’s Advantages and Services

    5. Alibaba, Taobao’s Advantages and Services

11. The Ecosystem Surrounding Quick Commerce Platforms

    1. In-Store Services

    2. To-Home Services

    3. Traffic Platforms: Search and Discovery

    4. Restaurants, Retailers, and Other Physical Shops

    5. On-Demand Logistics

12. Closing: What China Teaches Us

13. The Current Players and Landscape in SEA Today

    1. Grab Holdings

    2. Sea Limited

    3. TikTok Shop

14. Strategic Positioning: Three Different Plays

    1. Core Business Model

    2. Customer Acquisition & Frequency

    3. Logistics Network & Fulfilment

    4. Merchant/Seller Network

    5. Monetisation and Revenue Streams

15. What It Takes to Win in SEA Quick Commerce

16. Southeast Asia vs China

17. How this Converges over the Next 5 Years

18. How Big can Quick Commerce be in Southeast Asia?

19. Why Southeast Asia Won’t See a China-Level Subsidy War Everywhere (Yet)

20. The End-Game for SEA Quick Commerce

21. Conclusion

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1. Quick Commerce 101

Quick commerce refers to ultra-fast, on-demand delivery, typically fulfilling orders within 10 to 60 minutes by leveraging nearby retail stores or micro-warehouses.

Quick commerce first began with service-heavy categories like restaurants, and expanding into products that require more delicate handling, such as flowers and cakes. Today, thanks to the massive scale these platforms have accumulated, it has become cost-effective to deliver more commoditised, lower-margin products as well.

In China, quick commerce has now evolved into a broad retail channel. Platforms offer everything from clothing and electronics to groceries and everyday household items, effectively replicating the assortment of a local physical store, delivered within the hour.

Why Quick Commerce is Inevitable

At its core, the history of retail is a story of collapsing time and friction. Consumers have always traded up on convenience, moving from physical stores to e-commerce, from multi-day delivery to same-day, and now from hours to minutes. As cities become denser and consumers more smartphone-native, the distance between inventory and demand keeps shrinking, making ultra-fast delivery not just desirable but increasingly viable.

Once that infrastructure is in place, it is only natural for platforms to onboard more types of merchants that can leverage the same delivery system. As scale increases and delivery costs fall, and as micro-warehouses and local fulfilment hubs proliferate, an expanding range of products becomes economically viable for instant delivery.

More importantly, as consumers become accustomed to on-demand fulfilment in one category, their expectations reset across others, shifting behaviour from planned purchases to immediate consumption. This creates a virtuous cycle of higher frequency, better density, and lower unit costs, making the expansion of quick commerce less a strategic choice and more a structural inevitability.

In that sense, quick commerce is not a discretionary product decision, but the natural end-state of a scaled marketplace.

2. Quick Commerce in China

China’s quick commerce market operates at a scale that is difficult to replicate anywhere else in the world. In 2024, DoorDash, the largest player in the US, processed roughly 6.8 million orders per day. By contrast, Meituan and Alibaba’s quick commerce platforms each handle more than 70 million daily orders, around ten times of DoorDash’s volume.

By the end of 2025, quick commerce was running at roughly 180 million orders per day, with about 40 million coming from non-food categories. Because non-food categories have a much higher AOV, it now accounts for over 40% of the ~RMB 2.5 trillion (USD $350 billion) quick commerce market.

Population density is a major driver, but much of the credit has to go towards Chinese platforms, who have developed deep innovations across both supply and demand, enabling them to generate and sustain extraordinary order volumes.

We expect many of these playbooks to spread globally. For Southeast Asia in particular, China’s trajectory can be a helpful reference, given the region’s cultural proximity and strong links to Chinese culture and companies.

First, for readers new to China’s quick commerce landscape, here’s a brief overview of the main players.

Meet the Players

Meituan

Meituan is China’s leading food delivery platform processing over 70 million orders on a daily basis. In 2024, Meituan generated RMB 337.6 billion (~USD $47 billion) in revenue and over RMB 35.8 billion (~USD $5 billion) in net income. At the time, it controlled over 70% of China’s food delivery market, and notably, close to half of its revenue now comes from services beyond food delivery.

Meituan is deeply embedded across the restaurant value chain. It plays a meaningful role in POS systems, reservations, reviews, group-buying coupons, and is also a key platform for restaurants to source groceries and supplies. Beyond food, Meituan has also built a strong position across a wide range of O2O services, including bike and power bank sharing, movie ticketing, and local services. It is also an important player in travel, offering hotel bookings as well as train and flight reservations.

Alibaba

Alibaba is China’s largest e-commerce and cloud computing platform by both market share and profitability. It owns Taobao, the world’s largest e-commerce platform by GMV. Alibaba is also behind Qwen, a leading open-source large language model adopted by Airbnb and other Western companies.

In 2024, Alibaba reported revenue of RMB 996.3 billion (~USD $137 billion) and profits of RMB 126 billion (~USD $17.3 billion). Prior to the escalation of the quick commerce war, its food delivery platforms, Ele.me held roughly 20% market share.

Beyond Taobao, Alibaba operates a portfolio of specialised e-commerce platforms. Xianyu is a second-hand C2C marketplace with 200 million users. 1688 is a B2B marketplace with over 100 million users. AliExpress is a B2C marketplace focused on international markets. In addition, Alibaba also owns a broad suite of internet services, many of which exceed 100 million users. These include AMAP, Qwen, Youku, and Dingtalk, reinforcing Alibaba’s position as one of the most deeply embedded consumer and enterprise technology ecosystems in China.

JD

JD is one of China’s leading B2C e-commerce platforms, widely recognised for its authentic products, high service standards, and consistently fast delivery. It has a particularly strong following among higher-income consumers who value reliability and quality.

Beyond retail, JD operates across a broad range of sectors. Its logistics arm, JD Logistics, is widely regarded as one of the most sophisticated logistics networks globally. JD also owns Dada Group, an on-demand delivery platform processing roughly 8 million orders per day. JD’s ecosystem spans the entire eCommerce supply chain, including industrial services, financial services, telehealth and physical retail through JD Convenience Stores, JD Health, JD auto care, 7Fresh, JD Mall, and more.

In recent years, JD has shifted from a purely self-operated model (1P) to a platform model (3P), with over half of its GMV now generated by third-party sellers. In the past year alone, it has expanded into food delivery, hotel booking, community group buying, restaurant reviews, and other new ventures. These bold moves have been supported by strong growth in its core e-commerce business, fuelled in part by the national subsidy program.

Douyin

Douyin is China’s domestic equivalent of TikTok. It is one of the largest sources of consumer traffic in China, with over 1 billion monthly active users. Users spend an average of more than 1.5 hours per day on the platform. Douyin is owned by ByteDance, which also owns several other traffic sites, including Toutiao and Xigua Video. Today, ByteDance is regarded as the pre-eminent internet company in China. For reference, its top and bottom-line in 2025 are comparable to Meta’s, despite its main product, Douyin, launching over a decade after Facebook.

On the commerce side, Douyin’s e-commerce business has reached GMV levels comparable to JD.com, while growing at a significantly faster pace. Its push into local services, including group-buying coupons, represents a meaningful competitive threat to Meituan. More broadly, Douyin’s unrivalled traffic scale and live-commerce capabilities are accelerating the convergence of retail, entertainment, and offline consumption, further blurring the boundaries between physical and digital commerce.

Pinduoduo

Pinduoduo is China’s second-largest e-commerce platform by GMV, best known for its affordable white-label products. In addition to its core business and global expansion through TEMU, Pinduoduo is also the country’s leading platform for agricultural goods. Its grocery service, Duoduo Maicai, is the largest community group-buying network in China. Operating on a next-day delivery model, it allows customers who place orders before midnight to receive their groceries before noon the following day.

S.F. Intra-city

S.F. Intra-city is a subsidiary of S.F. Express, China’s largest logistics company by revenue and a brand synonymous with premium service. As the leading third-party on-demand delivery platform by revenue, S.F. Intra-city now fulfils around 5 million orders per day and is the preferred instant-delivery partner for premium brands seeking high-reliability, time-critical fulfilment.

3. The Backstory of China’s Quick Commerce War

Much of the attention around China’s quick commerce war has centred on Meituan and Alibaba Group (via Ele.me and Taobao Flash Shopping). However, the company whose core value proposition is arguably under the greatest threat is JD.com.

JD was the first to escalate the conflict, formally kicking off the latest phase of competition in February 2025. Alibaba followed roughly three months later, announcing an initial RMB 50 billion (~USD $7 billion) investment into quick commerce. This raises an important question: why did JD start the war in the first place?

Why JD Lit the Match

JD is a leading B2C e-commerce platform in China, long recognised for its quick and reliable delivery. However, since Meituan’s aggressive push into quick commerce beginning in 2021, particularly across daily necessities and consumer electronics, JD’s delivery advantage has come under increasing pressure.

JD’s delivery edge was built on an extensive network of distributed warehouses and logistics hubs. By the end of 2024, the company operated more than 1,600 warehouses and over 19,000 logistics hubs nationwide, enabling delivery windows ranging from 4 to 48 hours. In fact, approximately 95% of first-party products are delivered within 24 hours.

Meituan, however, has pursued a different model. By partnering with hundreds of thousands of physical stores and rolling out more than 50,000 micro-warehouses, it has rapidly scaled infrastructure optimised for ultra-fast fulfilment.

For a growing segment of consumers, Meituan has become the default app for speed, with delivery times often under 30 minutes. As a result, JD has gradually lost mindshare around being the fastest option, a critical pillar of its historical differentiation.

By late 2024, over 300 million users had purchased non-food items through Meituan’s Flash Shopping service. Average daily volumes surpassed 10 million in Q3 2024 and has continued to grow rapidly. Peak daily orders reached 18 million in April 2025 and surged to 25 million by August 2025.

In effect, Meituan’s expansion began to encroach directly on JD’s core promise. JD’s decision to initiate the quick commerce war was therefore defensive as much as it was offensive.

The Convergence of Four E-Commerce Logistics Models

In traditional e-commerce, there are four main platform types, each paired with a different delivery model that reflects its unique value proposition.

• C2C marketplaces: Over 2 million SKUs – Delivers in 72+ hours - last mile workers deliver 300-800 packages on average per day

• B2C platforms: Under 2 million SKUs – Delivers in 6 to 72 hours - last mile workers deliver 200+ packages on average per day

• Grocery e-commerce: Under 100K SKUs – Delivers in 2 to 36 hours, often next-day - last mile workers deliver 100+ packages on average per day

• Food delivery apps: Under 20K SKUs – Delivers in under 1 hour - last mile workers deliver 40-60 packages on average per day

In China, as logistics infrastructure has rapidly matured, the boundaries between these networks have begun to blur. Sellers on C2C platforms have become increasingly commercialised and operationally sophisticated, enabling much faster fulfilment. Many orders that once took more than 72 hours are now delivered in under 24 hours, especially in Tier-1 cities.

This evolution has narrowed the speed gap between C2C and B2C. The traditional strength of B2C logistics, speed, is no longer a clear advantage.

A key structural constraint for B2C logistics, however, is that warehouses are typically located in suburban areas. This creates inherent limits on delivery speed due to distance and the need for batch-based distribution. For JD to improve its delivery time meaningfully, it will likely need to adopt a new logistics model that breaks this bottleneck.

4. How the War is Being Fought

JD’s Push into a New Logistics System

JD Logistics, a publicly listed company majority-owned by JD.com, fully acquired DADA Group in Q2 2024. DADA had already been a listed subsidiary of JD prior to the transaction, but was not fully owned. In October 2024, JD.com then acquired DADA from JD Logistics, bringing the asset directly under the group’s control. Shortly after, in February 2025, JD launched its own food delivery service leveraging DADA’s capabilities.

DADA is an on-demand delivery platform that helps retailers and brands fulfill instant delivery orders. Major chains such as Yonghui Supermarket (永辉超市), Walmart, and Carrefour rely on DADA for their on-demand fulfillment needs. As of Q3 2024, DADA was handling approximately 7 million orders per day.

By fully integrating DADA and launching its food delivery business, JD built its “new” logistics network to compete head-to-head with Meituan’s quick commerce business.

JD first launched its food delivery service within the JD app, leveraging its existing traffic and offering aggressive subsidies to attract both restaurants and consumers to the newly formed marketplace. It focused on onboarding “high-quality” restaurants and hired more than 150,000 full-time delivery workers to support the operational workload.

Achievement Highlights:

• March 1: Surpassed 1M orders per day – Initial launch, with a zero-commission policy attracting merchants

• April 15: Peaked at over 5M orders per day – CEO Richard Liu personally delivered orders; JD launched a RMB 10 billion subsidy campaign

• April 22: Peaked at over 10M orders per day – Reached this milestone just 70 days after launch

• May 14: Peaked at over 20M orders per day – Approached the scale of the second-largest player in just 75 days

• June 18: Peaked at over 25M orders per day – Set a yearly high during the 6.18 shopping festival

JD now appears to be stabilising at around 11 million orders per day if exclude orders from its third-party DADA Group.

Alibaba Joins the War

Alibaba Group was the primary challenger to Meituan in China’s on-demand market long before JD escalated the latest phase of the quick commerce war. With deeper roots in local services and the financial firepower of its core e-commerce business, Alibaba has since displaced JD as the market’s “new” challenger.

This rivalry is not new. In fact, Alibaba was once a major investor in Meituan. The relationship began to deteriorate after Meituan aligned itself more closely with Tencent in 2015. Alibaba responded by backing Meituan’s main rival, Ele.me, before fully acquiring the company in 2018.

Despite committing more than USD 10 billion to the effort, Alibaba failed to arrest Meituan’s rise. Between 2016 and 2020, Meituan’s food delivery market share expanded from roughly 35% to over 70%, while Alibaba’s delivery arm struggled to gain traction. To date, Alibaba’s on-demand delivery business has yet to achieve profitability.

Will Alibaba Succeed This Time?

No one knows how this round will ultimately play out, but several factors make this cycle meaningfully different.

Firstly, Alibaba is finally entering the war with the full weight of its core business rather than merely using Ele.me to fight the proxy war. Taobao has folded food delivery directly into its e-commerce group and fully embedded Ele.me into the Taobao user experience. Ele.me has been rebranded as Taobao Flash Sale, given priority placement, and elevated to a first-class traffic destination within Alibaba’s ecosystem.

Second, the external environment has improved significantly. Regulators have moved to curb practices that forced restaurants and other third-party sellers to choose sides, and after years of industry standardisation, most restaurants now list on both Meituan and Ele.me. This has lowered switching friction and made multi-platform competition far more viable than in previous cycles.

Lastly, Alibaba’s internal posture has shifted. Under new e-commerce CEO Jiang Fan, and with legendary founder Jack Ma once again closely involved, the company’s willingness to invest aggressively has clearly increased. Capital allocation, execution intensity, and competitive ambition are all operating at a level not seen in recent years.

Meituan and Alibaba’s Competitive Advantage

Meituan’s moat is primarily driven by powerful three-sided network effects across merchants, consumers, and riders, and it holds a clear competitive advantage in all three. Scale on the demand side attracts more merchants, greater merchant density improves selection and pricing, and higher rider density lowers fulfillment times and unit economics, reinforcing the flywheel.

That said, Alibaba Group enters the battle with a different set of strengths. First, it has a significantly larger war chest, giving it greater capacity to sustain subsidies and long-term investment. Second, Alibaba has access to a much broader base of e-commerce users through Taobao, many of whom can be converted into quick commerce users at relatively low marginal cost. Third, Alibaba maintains deep, long-standing relationships with pure-play e-commerce sellers and major brands, providing a structural advantage as quick commerce expands beyond food into higher-value, branded retail categories.

Meituan’s Advantages

Although Alibaba and Meituan offer access to a broadly similar merchant base, Meituan’s relationships with restaurants are far deeper and more structural.

On the merchant side, Meituan controls a significant share of the restaurant POS market and is a major driver of in-store demand through group-buying coupons. It has also worked closely with many restaurant operators to launch cloud kitchens and develop platform-exclusive menu items tailored specifically for on-demand consumption. In addition, Meituan owns Dianping, China’s largest restaurant review platform, and KuaiLu, a leading grocery replenishment platform for restaurants. Together, these assets embed Meituan deeply into daily restaurant operations, not just order fulfillment.

On the rider side, Meituan has built a highly mature and disciplined delivery network. A large portion of its riders are managed by experienced franchise operators who oversee full-time couriers. These franchise-managed riders form the backbone of Meituan’s stable, high-efficiency delivery system, contributing to consistent service quality and reliable fulfilment.

On the consumer side, Meituan has spent years refining its unit economics by actively identifying profitable users and deprioritising those that are structurally loss-making. As a result, Meituan has a clear understanding of which users contribute positively to long-term profitability. Unlike Alibaba, which is currently subsidising a large proportion of orders more indiscriminately, Meituan takes a far more selective approach, targeting incentives primarily at users with attractive lifetime value.

This filtering mechanism extends beyond consumers to merchants and riders as well. Over time, weaker operators are naturally pushed out, leaving Meituan with a higher-quality base of restaurants and a more reliable rider network than its competitors.

5. The Current Status of the War

As of the latest earnings calls, the three major players have collectively accumulated around RMB 100 billion (~USD $14 billion) in losses over Q2-Q3 2025. In recent months, daily order volumes have stabilised at roughly 75 million for Alibaba, 75 million for Meituan, and around 11 million for JD.

GMV Market Share: Alibaba v. Meituan

From May to September, Alibaba grew its daily order volumes to a level similar to Meituan’s. Despite this surge in volume, the GMV split between Meituan and Alibaba has remained broadly stable at around 6:4. Including JD in the comparison, Alibaba’s GMV share remains below 40%, while Meituan continues to hold just above 50%.

This gap exists because Alibaba’s orders are mostly low-value transactions. In August 2025, its average order value was estimated to be around RMB 15-20, and at the peak of promotional activity, more than half of all orders came from bubble tea and coffee shops.

By contrast, Meituan continues to dominate higher-value orders. In the third quarter, Meituan accounted for more than 66% of orders above RMB 15 and around 70% of orders above RMB 30. This reflects a structurally stronger position in higher-ticket categories and helps explain why Meituan has been able to defend its GMV share despite aggressive competitive spending across the industry.

China’s Food Delivery Unit Economics (Pre-War)

In China, the average rider cost per order is about 7 yuan, and the platform’s gross take rate (including commissions, delivery fees, advertising, etc.) is roughly 25%. This implies that the platform needs an average order value of at least 28 yuan to break even.

Before the subsidy war began, China’s average order value hovered around RMB 45–50. With rising order volumes, new operational initiatives, and a gradual reduction in subsidies, Meituan has successfully turned quick commerce into a highly profitable business.

Over the past three years, Meituan’s operating profit per order has been:

• 2022: ~1.05 yuan

• 2023: ~1.2 yuan

• 2024: ~1.4 yuan

In 2024, Meituan achieved operating profits equivalent to about 4% of food delivery GMV with a gross take rate of only around 25%. By comparison, despite an estimated 30-35% gross take rate, DoorDash captures only about 1% of GMV as profit. Grab’s gross take rate is around 35%, yet its segment adjusted EBITDA margin is roughly 2% of GMV.

Meituan is therefore at a meaningfully later stage of the monetisation curve.

China’s Food Delivery Unit Economics (Post-War)

In Q3 2025, Meituan’s delivery business is estimated to have recorded a loss of around RMB 20 billion ($2.8 billion USD), compared with roughly RMB 36 billion ($5 billion USD) for Alibaba. Despite operating at similar order volumes, Alibaba’s loss per order is still about 2.1x that of Meituan’s. In other words, there remains roughly a RMB 15 billion ($2 billion USD) gap in cost structure even at comparable scale.

That said, Alibaba has been actively optimising its unit economics, and its AOV mix has improved substantially. Average order value has grown at a double-digit rate, and less than 25% of orders now come from bubble tea and coffee shops. Alibaba’s loss per order has been cut roughly in half from the lows seen in July. Even so, there remains a gap of roughly RMB 2 per order versus Meituan, underscoring the persistence of Meituan’s structural efficiency advantage.

The Difference in Unit Economics

The difference in unit economics comes down to two key factors:

1. The delivery network

2. The core user base of each platform

Delivery Network

First, Meituan’s delivery network is still meaningfully more efficient. This is partly due to its data advantages in batching and routing, and partly because Meituan operates a larger, more experienced base of full-time franchise operators and riders.

These franchise-managed, full-time riders form the backbone of a more disciplined and predictable delivery system, which translates into higher utilisation and lower cost per order. (We will discuss the franchise and full-time rider model in more detail shortly)

Core Users of the Platform

Over the past few years, Meituan has been refining its unit economics by actively identifying profitable users and deprioritising those that are structurally loss-making. As a result, Meituan has a much clearer understanding of which users contribute positively to long-term profitability.

Unlike Alibaba, which is currently subsidising a large proportion of orders more indiscriminately, Meituan takes a far more selective approach, targeting incentives only at users with attractive lifetime value. In 2025, depending on a customer’s VIP tier, core spenders receive meaningfully larger discounts on the same orders, reinforcing this focus on high-quality demand.

6. What are they Fighting for?

There are two main prizes at stake:

1. The fast-growing quick commerce market

2. The traffic spillover from bundling quick commerce with existing platforms

The Quick Commerce Market

In 2024, the market size of e-commerce in China overall is about 16 trillion yuan (~ USD $2.3 trillion). Food delivery alone accounted for around 1.35 trillion yuan (~ USD $193 billion), while non-meal quick commerce was approximately 780 billion yuan (~ USD $110 billion). Combined, the broader quick commerce market was therefore worth about 2.1 trillion yuan (~ USD $300 billion).

While China’s overall e-commerce market has been relatively stagnant, the non-meal quick commerce sector has seen explosive growth, with a CAGR of around 46% from 2019 to 2024, and is expected to grow a further 20-30% in the coming years. It is becoming an increasingly large part of the pie, and it is likely only a matter of time before it surpasses traditional food delivery in scale. Alibaba’s CEO has been explicit about this, stating on the Q2 2025 earnings call that quick commerce is expected to contribute around 1 trillion yuan in incremental GMV over the next three years.

For Alibaba and JD, even though quick commerce still accounts for only about 5% of the eCommerce market today, its expanding selection and improving value proposition represent a growing strategic threat. For example, Meituan is now offering an increasingly broad range of electronics and branded products that were traditionally only available in physical stores or through conventional e-commerce platforms.

Traffic Spillover

It is a well-known strategy that bundling products or features increases user retention and usage. Amazon Prime, Microsoft Office, and Meituan’s own super-app ecosystem are all built around this logic. Alibaba and JD are similarly hoping that by bundling quick commerce into their platforms, users will also increase their engagement with their core e-commerce offerings.

Since the subsidy war began, both JD’s and Alibaba’s DAU have indeed risen by a meaningful amount. For now, however, the bundling of quick commerce into the core offerings does not appear to have had a meaningful impact on core sales yet.

The Different Approaches of Alibaba vs. Meituan

Alibaba and Meituan are approaching quick commerce from fundamentally different starting points.

For Alibaba, the goal of rolling quick commerce into Taobao is primarily to enhance the delivery experience for the same products already sold on its platform. For Meituan, the focus is more on expanding SKUs and merchant coverage to better serve users using the same underlying on-demand delivery network. This leads to two very different ways of building the business.

Alibaba effectively segments products into three categories:

1. Urgent needs: delivered within 30 minutes

2. High-intent needs: fulfilled within 4 hours / same day

3. Other products: shipped through the traditional e-commerce logistics system

Meituan, by contrast, is far more singular in its ambition: 30-minute delivery for as many categories as possible. They also treat food delivery very differently. For Alibaba, restaurant orders are primarily a way to lower the marginal cost of operating an on-demand network, with the ultimate goal of better monetising non-food categories.

This is why, after scaling restaurant orders, Alibaba has increasingly shifted its focus toward non-food products. For Meituan, restaurant orders are the core of the business, and the company continues to double down on this segment as its foundation.

Quick Commerce Market in 2024

Within the roughly 780 billion yuan quick commerce market, the competitive landscape can be broadly divided into three tiers:

1. Meituan

2. JD and Ele.me

3. Other players

Meituan alone fulfilled over 270 billion yuan in GMV, implying a market share of around 35%. JD and Alibaba’s Ele.me each held roughly 10% market share. The remaining players, including Alibaba’s Freshippo, Sam’s Club, Dingdong and various other independent retailers, collectively accounted for around 45% of the market.

In 2024, Alibaba’s Ele.me, Taobao’s one-hour delivery, and Freshippo were still largely operated as separate businesses. Many third-party orders were fulfilled either by merchants’ own fleets or outsourced to independent on-demand delivery platforms such as DADA Group or S.F. Intra-city.

What has Changed in 2025?

The most important shift is that Alibaba has started to integrate these previously separate businesses, and has begun to replace parts of its original delivery fleet with Ele.me’s workforce.

Second, before Alibaba launched aggressive subsidies, many quick commerce merchants chose not to sell on Ele.me because the traffic was not worth the added operational complexity. With the new subsidy push, more sellers are now choosing to serve both platforms.

In recent months, Meituan’s non-food orders have stabilised at around 18 million per day, with average order volume growing roughly 80% year-over-year. Meanwhile, Taobao has surpassed 10 million average daily orders, with active buyers growing by around 200%. (10M orders include Tmall Supermarket orders/Freshippo orders, if exclude it’s 7M)

What are the Limits of Quick Commerce?

The biggest limiting factor for quick commerce is selection. To achieve 30-minute delivery, products must be stored within roughly a 3-mile radius of the customer. This makes the model capital-intensive and operationally demanding, requiring a very high level of service quality.

Today, even in the city centres of China’s Tier-1 cities, the available selection is only around 200,000 SKUs (we will discuss micro-warehouses in more detail shortly).

Because of storage constraints and the promise of rapid delivery, pricing in quick commerce is generally less competitive than in traditional e-commerce. The shopping experience in some verticals such as apparel and electronics is also still weaker. Customers may receive the wrong item, or products that have been returned or previously used. It will likely take several more years of operational refinement before the overall experience reaches parity with traditional e-commerce.

7. The Next Stage of the War & Other Players

Taobao and Meituan are both platforms that are primarily driven by search intent, but the nature of that intent differs. On Meituan, search intent is mostly concentrated around food delivery, groceries, and urgent needs. On Alibaba, by contrast, most users come for long-tail SKUs and broader selection.

For now, quick commerce is still largely centred on food delivery. This is because the infrastructure for long-tail quick commerce remains relatively primitive. Most brands still do not store inventory close to end consumers, even though both Taobao and Meituan are aggressively building this capability. It will likely take several more years before the product experience for long-tail, instant fulfilment becomes truly smooth and reliable.

While Meituan, Alibaba, and JD are the three main players today, companies like Douyin and Pinduoduo are also testing, or have already launched, related offerings in this space. On-demand commerce is simply too important a battleground for major e-commerce platforms to ignore.

AI Search & Qwen

Qwen is Alibaba’s equivalent of ChatGPT and has now surpassed 100 million monthly active users. It is deeply integrated across Alibaba’s apps. In my personal experience, the food ordering flow through Qwen is already very smooth.

Large language models could become a meaningful traffic driver for quick commerce by changing how users search and discover products. During the 2/6 promotion, Qwen reportedly fulfilled one million bubble tea orders within three hours, highlighting the potential of AI-driven interfaces to reshape demand distribution.

Regulators & Platform Subsidies

There has been increasing noise from regulators around curbing excessive competition in the quick commerce space. In our view, the government is not trying to stop competition between platforms per se, but rather to limit the abuse of platform traffic power to force merchants into unsustainable subsidy wars.

China’s Quick Commerce Subsidies

An interesting shift has occurred compared to the early days of ride-hailing and food delivery in the 2010s. Back then, restaurants generally welcomed platform competition because platforms were subsidising both merchants and consumers aggressively.

This time is different. Many restaurants are now under significant pressure. As platforms have gained more control over traffic distribution, they have increasingly used that leverage to force merchants to co-fund subsidies. When all major platforms adopt the same practice, merchants effectively have no choice.

Regulatory intervention is therefore aimed at preventing platforms from dragging merchants into a race to the bottom, and at ensuring that merchants are not the primary losers in the subsidy war. Before regulators stepped in, for every dollar a platform subsidised, merchants often had to contribute roughly three dollars. For example, if a platform offered a four-dollar coupon, the merchant would typically be required to fund three dollars of that discount.

8. What makes China’s Instant Logistics Special? How Do Platforms Aggregate So Much Volume?

To understand the efficiency of Meituan’s instant logistics model, two structural factors matter above all else.

First, China’s urban design and restaurant ecosystem are unusually well-suited to food delivery. Many cities are built around electric scooters, and the restaurant environment itself is optimised for delivery. This creates what could be described as a native food delivery environment.

Second, and more importantly, platforms relentlessly aggregate both demand and supply. This combination drives extremely high utilisation. For instance, it is normal for a rider to complete around 8-9 deliveries per working hour, a level of density that is difficult to replicate elsewhere.

A Native Food Delivery Environment

In China, many cities and road networks are designed with electric scooters in mind, which are ideal for food delivery. Most restaurants now offer menus specifically tailored for delivery, and in some cases, ordering delivery is actually cheaper than dining in-store.

Ghost kitchens and cloud kitchens are also widely used, producing food solely for delivery platforms. In addition, many shopping malls and food plazas have dedicated parking areas for riders, and sometimes even internal corridors designed to speed up order pickup. At the destination, office buildings and residential complexes often provide delivery lockers or shelves where riders can drop off orders efficiently.

Today, dark kitchens alone account for roughly 30% of total food delivery orders.

The Normalisation of Loss Leaders

In China’s ultra-competitive environment, e-commerce platforms are deeply familiar with the concept of loss leaders. Loss-making orders are treated as a marketing expense to boost user frequency, expand scale, and suppress competition.

As a result, a meaningful portion of orders across most platforms is structurally unprofitable. This is not seen as a failure, but as a deliberate strategy to build habit, density, and long-term competitive advantages.

9. How Platforms Are Innovating

Innovation on the Supply Side

Meituan is a good example of how platforms innovate on the supply side. It increasingly treats kitchens like factories: standardised, digitised operations designed to produce meals at lower cost and higher consistency.

To support this, Meituan operates across the restaurant value chain:

• KuaiLu: helps restaurants replenish groceries faster and at lower cost

• POS systems: help restaurants track costs, participate in promotions, and digitise daily operations

• Raccoon Kitchen and branded satellite stores: help strong restaurants scale through site selection and cloud-kitchen formats while lowering operating costs

• Redeemable flash-sale coupons: aggregate demand during off-peak periods to boost utilisation

Together, these tools help restaurants scale more efficiently while keeping prices competitive. But Meituan does not stop at being just a tool provider, it increasingly intervenes directly in food supply itself.

Pinhaofan (拼好飯)

Pinhaofan, launched in 2020, is one of the clearest examples of Meituan stepping directly into the supply side. It is often described as the Pinduoduo group-buying model for food delivery, and today contributes a double-digit share of Meituan’s total orders.

Meituan initially launched Pinhaofan in lower-tier cities, targeting more price-sensitive consumers, before gradually expanding it nationwide. The model is relatively simple. Meituan selects a small number of popular dishes such as “Beijing Duck” or “Dumplings”, and then partners with restaurants in each region to produce them. Meituan guarantees a fixed purchase price to the restaurant and sets the final retail price itself.

In effect, this turns restaurants into outsourced production units for the platform. The final price, including delivery, typically ranges between 10-15 yuan (about USD 1.50-2.10) for a full meal.

Meituan loses money on most Pinhaofan orders. But this is a deliberate choice, it keeps users engaged, increases order frequency, and helps the platform build the scale and density that underpin its logistics efficiency.

Innovation on the Demand Side

Shenqiangshou (神抢手)

Shenqiangshou is one of Meituan’s initiatives that packages restaurant meals into products designed to be sold through live streaming, short videos, newsfeeds, and other discovery-driven channels. The goal is to standardise what is usually highly customised and difficult to forecast, making both demand and sales more predictable. This allows restaurants to reach customers through both traditional intent-based ordering and discovery-based browsing. Today, Shenqiangshou accounts for a double-digit share of Meituan’s total orders.

God Coupon (神券)

God Coupon is Meituan’s coupon-driven traffic allocation system. It further segments in-app traffic by grouping customers based on their behaviour and their familiarity with the app. Users receive different offers based on past behaviour, and the system also rewards those who actively engage with and learn how to use the platform. The result is effectively personalised pricing for each customer.

Compared with traditional VIP programmes, the key difference is that VIP discounts are usually static: members receive predictable discounts tied to their membership tier, and merchants provide additional discounts based on that level. God Coupon, by contrast, uses dynamic, behaviour-based incentives.

On the merchant side, restaurants can opt into different programme tiers depending on how much discount they are willing to offer for specific customer segments and dishes. Meituan then matches those coupons to the right users to improve overall conversion.

Overall, this system helps Meituan allocate demand more efficiently across different restaurants and user segments.

Innovation on the Rider Side

A key difference between Meituan and many Western delivery platforms is that Meituan places far greater emphasis on rider experience and familiarity. Unlike Western platforms, which rely primarily on data metrics and batching algorithms to manage service quality, Meituan uses a franchise-partner network to manage full-time couriers, smooth capacity swings, and maintain consistent service levels.

Meituan also groups gig couriers into tiers. The core idea of this system is to route different types of orders, often segmented by price and context, to couriers who repeatedly operate in similar environments, allowing them to build familiarity over time. This familiarity allows an experienced delivery to be nearly twice as productive as a new worker.

The Four Main Delivery Models

In practice, Meituan operates four main delivery models (which you can think of as funnels):

1. Chang Pao 暢跑(freelance, priority access)

   1. Riders can pick orders first, so the easier orders usually land here.

   2. It’s common to complete 8-9 orders per hour.

   3. Pros: very flexible hours; usually stays busy

   4. Cons: low pay per order (about 3.5-5.5 yuan); physically demanding; you may not see the final pay for an order until the next day

2. Exclusive 專送(full-time, franchise-managed)

   1. Full-time riders are the backbone of the network, managed through franchises (typically 50-150 riders per franchise).

   2. Pros: base salary; more balanced order volume; better learning from experienced riders

   3. Cons: assigned orders (no picking, and can include undesirable orders); work continues regardless of weather

3. Le Pao 樂跑 (part-time support for peak periods)

   1. Similar to the Exclusive model, but mainly used to help balance volume during peak seasons (e.g., summer or major promotions).

4. Overflow freelancers 純眾包(used for residual orders)

   1. The platform typically uses this group to handle orders that remain after the main funnels are covered.

In addition, Meituan operates smaller, specialised funnels for fragile items (such as flowers and cakes), expedited deliveries, longer-distance orders, and riders assigned to specific stores, among others.

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10. The Infrastructure Layer

Meituan’s Initiatives and Micro-Warehouses

For quick commerce to scale beyond food, Meituan needs to strengthen the supply side of its marketplace. It cannot rely solely on existing physical retailers. It also needs fast, reliable inventory positioned close to consumers. This is why Meituan has been building a network of urban micro-warehouses to fulfil orders more quickly and more consistently.

Micro-Warehouses

Micro-warehouses are the retail-goods equivalent of ghost kitchens. Just as ghost kitchens are built specifically for food delivery platforms, micro-warehouses are built specifically for quick commerce. They are typically cheaper to operate than physical retail stores, which allows platforms to offer more competitive pricing.

Like physical stores, micro-warehouses are usually located within cities. The difference is in their purpose. Physical stores are optimised for foot traffic and the in-store shopping experience. Micro-warehouses, by contrast, are essentially small warehouses embedded within urban areas, often located inside buildings or basements with near-zero foot traffic.

Another key difference is operating hours. Micro-warehouses are typically open 24 hours, whereas physical stores usually operate on limited schedules.

Here is a comparison of physical stores, micro-warehouses, and mid-sized e-commerce warehouses:

Micro-Warehouse Types

Micro-warehouses can be broadly divided into three categories:

1. General merchandise

2. Specialised warehouses

3. Brand warehouses

General Merchandise

General merchandise micro-warehouses are essentially the dark-store equivalent of convenience stores. They focus on high-frequency items and tend to have the highest location density.

Compared with convenience stores, the key difference is assortment. They typically do not carry fresh products, but they offer roughly 2-3x more SKUs.

Squirrel Convenience Store and Taobao Convenience Store are Meituan and Alibaba’s self-operated brand built around this model.

Specialised Warehouses

Specialised warehouses are dark-store formats built around specific retail verticals. Common examples include pet supplies, beauty and personal care, alcohol, and pharmacy.

Freshippo and Xiaoxiang Supermarket are fresh-focused formats backed by Alibaba and Meituan, respectively.

Brand Warehouses

Brand warehouses are facilities that hold inventory for well-known brands in order to enable faster, often same-day, delivery.

In most cases, brands do not operate these warehouses themselves. Instead, they partner with professional micro-warehouse operators that manage shared facilities and store products from multiple brands under one roof.

Meituan’s Advantages and Services

Meituan began building its micro-warehouse network in 2018 and accelerated these efforts in 2021. To support third-party merchants, it developed the “Meituan Morning Glory System,” a software suite that helps merchants manage warehouse operations, source products, and sell across multiple quick-commerce platforms.

Because this system is deeply integrated with Meituan’s ecosystem, warehouses that adopt it can receive more traffic and gain better visibility into local search demand.

Compared with Alibaba, Meituan currently offers a broader selection and lower pricing in general merchandise, and it has also built a solid base of specialised and brand warehouses.

Alibaba’s Advantages and Services

Taobao’s key advantages are its massive traffic and long-standing relationships with brands. Because of these relationships, many brands are willing to participate in Taobao’s brand-to-warehouse model, placing inventory closer to consumers. As a result, when users search on Taobao, they can already select branded products that are eligible for fast delivery.

This offering is still limited to a relatively small number of SKUs today, but it is expected to expand. In particular, products stocked within the same city should increasingly qualify for same-day delivery.

Compared with Taobao, Meituan lacks the same depth of brand relationships and the same breadth of traditional e-commerce SKUs, but it compensates with stronger control over on-demand fulfilment and local inventory density.

11. The Ecosystem Surrounding Quick Commerce Platforms

To understand the value chain of quick commerce, we can broadly break the ecosystem into three layers:

1. Traffic & demand generation

2. Merchants (restaurants, retailers, and other physical or online shops)

3. On-demand logistics platforms

In addition to these core layers, there is a crucial adjacent category: in-store services.

In-Store Services

In China, “in-store services” refer to physical retail or service consumption that is driven by online traffic. As the boundary between online and offline continues to blur, more and more physical businesses now rely on digital platforms to acquire customers.

Similar to ghost kitchens, China has seen the rise of barber shops, salons, clinics, and other service providers that operate in locations with almost zero foot traffic and rely almost entirely on online demand. In-store services in China have now grown into an industry worth roughly USD $280 billion.

To-Home Services

The counterpart to in-store services is to-home services, where goods or services are delivered directly to the consumer. Quick commerce is a classic example: products are delivered from physical locations to your home.

Historically, quick commerce platforms have relied primarily on to-home services to drive transactions. However, to capture more marketing spend and deepen merchant relationships, in-store services have become one of the most important complementary channels.

In-store services range from simple restaurant bookings and pickup orders, to group-buying meals, to a wide variety of coupons for offline activities and even OTA-style services. What makes in-store services especially attractive is their near-zero marginal cost. Before the quick commerce war began, Meituan’s in-store services were estimated to contribute around 40% of its overall operating profit.

Strategically, in-store services matter because restaurants, physical stores, and retailers all rely on the same traffic platforms to drive both in-store and to-home sales.

Traffic Platforms: Search and Discovery

Today, quick commerce platforms still rely heavily on search-driven intent to generate sales. However, with the rise of live commerce and short-form video, an increasing share of transactions is now driven by discovery-based content. Many merchants now maintain dedicated social media teams purely to generate discovery-driven demand on these platforms.

Traditionally, quick commerce platforms monetise through search traffic (ads and commissions) plus delivery fees. As discovery-driven traffic becomes a larger share of incremental growth, quick commerce platforms have increasingly begun competing directly with content-driven traffic platforms for user attention and advertising budgets.

Restaurants, Retailers, and Other Physical Shops

Restaurants, retailers, and other physical shops form the supply backbone of quick commerce platforms. Diversity of selection and price competitiveness are the main reasons users continue to transact on these platforms.

Non-food supply has now become the centre of the e-commerce battlefield, and this is the core reason why traditional e-commerce players like JD, Alibaba, and Shopee feel increasingly threatened by players like Meituan and Grab, and are now scrambling to build their own on-demand logistics networks.

To capture more value and improve price competitiveness, we should expect continued evolution at this layer. More and more sales are likely to shift from traditional brick-and-mortar stores to micro-warehouses. The trend of brands adopting micro-warehouse models is, in our view, inevitable.

On-Demand Logistics

The on-demand logistics layer is the keystone of the entire ecosystem. Its flexibility is what allows the same network to serve many different business types simultaneously.

On-demand logistics did not originate with food delivery. Long before mobile internet, businesses already used courier networks for urgent parcels and documents. The real transformation today is that platforms can now offer fast delivery at affordable prices to almost any business and any consumer. That is what makes this wave fundamentally different.

Looking ahead, we expect two main types of on-demand logistics platforms to coexist:

1. Vertically integrated platforms owned by traffic ecosystems (e.g. Meituan, Grab, Taobao)

2. Independent platforms (e.g. SF Intra-City, Lalamove), which are likely to focus more on the premium and specialised end of the market

12. Closing: What China Teaches Us

We believe China’s quick commerce war offers three lessons that matter far beyond China.

First, quick commerce is ultimately a density and platform strategy game. Food delivery is just the starting point of quick commerce, while the true long-term value lies in the non-food category. When rider utilisation is high enough, delivery becomes cheap enough to support a broader assortment and higher frequency. But China’s experience also shows that the outcome is not driven by density alone. What truly moves the needle is the platform’s willingness to actively shape the supply side, aggregating demand, shaping merchant behaviour, standardising operations, and iterating at breakneck speed towards pushing more categories and use cases onto the same delivery network. In other words, platforms do not merely “unlock” existing supply, they manufacture and discipline it to fit the network. This is how new categories and use cases get pushed onto the same delivery network, even before they are naturally profitable.

Second, order volume is the most important long-term indicator. More orders mean more density, better rider utilisation and lower cost per delivery. Without enough throughput, no delivery network can ever approach efficiency. But China has already shown that volume alone does not decide outcomes. Two platforms can run at similar delivery volumes and still end up with radically different losses per order. The reason is that order volumes alone are not sufficient. Unit economics is also key. The structure of the network and the mix of users and merchants ultimately determine whether growth compounds or simply burns cash.

Third, quick commerce expands not just through search-driven demand, but increasingly through discovery and in-app surfaces that manufacture incremental orders. Food is the entry point, but non-food is the real long-term prize. In China, platforms have increasingly used content, promotions, and in-store services to create incremental demand, further reinforcing frequency and utilisation across the network. As discovery becomes a larger share of orders, advertising also becomes a structurally more important monetisation lever, and one of the key competitive battlegrounds between platforms.

These lessons are directly relevant to Southeast Asia, but they will not play out in the same way. The region’s fragmentation, varying urban density, and higher delivery costs will shape both the pace of adoption and the ultimate profit pool. With that framing, we can now turn to Southeast Asia’s starting point.

13. The Current Players and Landscape in SEA Today

Southeast Asia’s e-commerce sector has expanded rapidly over the past decade, underpinned by rising internet penetration, affordable smartphones, and a young, mobile-first population. By 2025, total e-commerce Gross Merchandise Value (GMV) in the region reached approximately USD $185 billion, making it one of the fastest-growing digital commerce markets globally. While traditional marketplace e-commerce still accounts for the majority of this volume, a structurally important shift is underway within the ecosystem.

A defining characteristic of Southeast Asia’s digital economy is that it is mobile-first by default. Unlike Western markets that migrated from desktop to mobile, Southeast Asia largely skipped the desktop era altogether. For hundreds of millions of consumers, the smartphone is their primary and often only computing device.

This has profoundly shaped how commerce platforms are built and used: verticalised apps, super-app behaviours, deep integration with payments, and high-frequency engagement loops are the norm. This environment has disproportionately benefited the likes of Sea Limited and Grab, whose entire product experience was designed from day one around mobile discovery, in-app engagement, and seamless checkout flows, rather than being retrofitted from a web-based desktop-first paradigm.

Quick commerce is emerging as one of the most promising growth vectors within Southeast Asian e-commerce. Although it remains a smaller portion of total GMV today, its strategic importance far outweighs its current scale. This is particularly true in online groceries, where penetration remains in the low single digits across most markets. As urban density increases and consumers grow accustomed to on-demand services, the ability to deliver essential goods within minutes rather than days is becoming a defining differentiator rather than a niche offering.

Food delivery represents another adjacent vertical that we believe will increasingly converge with quick commerce. In 2025, food delivery GMV in Southeast Asia is estimated at roughly USD $23 billion. Importantly, food delivery has already solved many of the hardest problems in last-mile logistics: dense rider networks, demand forecasting by location and time of day, and consumer willingness to pay for speed and convenience.

When combined with e-commerce and grocery delivery, these segments together represent a total addressable opportunity of more than USD $200 billion, growing at a mid-teens pace despite macroeconomic headwinds.

Unlike China, where quick commerce has entered a phase of intense competition focused on market dominance, subsidies, and monetisation, Southeast Asia remains firmly in the earlier stage of ecosystem formation. The current battle is not about extracting maximum profit per order, but about positioning, habit formation, and defining default consumer behaviour. Platforms are competing to become the first app consumers open when they need something immediately, whether that is a meal, groceries, or household essentials.

Growth in the sector continues to be driven by urbanisation and deeply entrenched on-demand consumption habits, but it is becoming more measured. Inflation and economic uncertainty have made consumers more value-conscious, forcing platforms to balance speed and convenience against pricing discipline and operational efficiency. This environment increasingly favours players with existing scale, strong logistics infrastructure, and the ability to cross-subsidise across multiple services.

A key structural constraint in Southeast Asia is that delivery costs remain high relative to basket size. This creates a fundamental tension. In Western markets, the typical response has been to push average order values (AOV) higher through bundling, subscriptions, and minimum order thresholds. In much of East Asia, however, the platform mindset is different. Rather than increasing basket sizes, platforms are under constant pressure to cut delivery costs and compress fees, because consumers are highly price-sensitive and used to cheap or free shipping. This makes unit economics in quick commerce structurally harder and raises the bar for operational excellence.

In our view, only three players meaningfully matter in Southeast Asia’s quick-commerce landscape today: Grab, Sea Limited, and TikTok Shop. Each is approaching the opportunity from a fundamentally different angle, shaped by their core competencies, existing user relationships, and long-term strategic objectives. We believe understanding these differences is key to understanding how Southeast Asia’s quick-commerce market is likely to evolve over the next decade.

Grab Holdings

Grab is the clear leader in ride-hailing and food delivery across Southeast Asia, with roughly 55% market share in the latter. In major urban centres such as Singapore, Jakarta, Bangkok, Ho Chi Minh City, and Manila, Grab benefits from the deepest rider density, the highest order frequency, and the strongest restaurant relationships.

In terms of Grab’s push towards quick commerce, their strategy has been to leverage its ride-hailing user base and infrastructure to cross-sell food (GrabFood) and grocery services (GrabMart), positioning itself as the go-to app for on-demand needs. It has also adopted the Meituan strategy of expanding beyond food into local retail, errands, ticketing, and services.

Grab’s core strength is its delivery network and marketplace efficiency. The company operates in over 500 cities and has over 45 million monthly transacting users. More importantly, Grab already owns the hardest asset to replicate. It has a liquid, city-level logistics network that is profitable in food delivery and extensible into adjacent categories. In other words, food delivery is what has kick-started Grab’s journey but is not the end-game. It is instead the engine that keeps riders active, demand predictable, and unit economics stable.

Grab is the closest equivalent to Meituan in Southeast Asia due to its deep focus on logistics-led services, food delivery, and local commerce. Like Meituan, Grab's core strength lies in owning the "I-need-it-now" consumer moment across major urban centers, leveraging a dense and operationally mature rider network that has already achieved profitability in food delivery.

To truly win in quick commerce, Grab’s next phase is not just about adding more categories, but about professionalising its fulfilment stack. That means better handling of fragile items, higher-value goods, temperature-sensitive products, and more standardised service levels. Today’s rider-based pickup model works extremely well for meals and convenience goods, but scaling into broader retail will require tighter packaging standards and more predictable service quality.

Sea Limited

Sea Limited is the largest digital player in the space and through Shopee, owns Southeast Asia’s largest demand surface in e-commerce. Its logistics arm (SPX Express) has scaled rapidly into next-day and same-day delivery, but it remains structurally different from food delivery networks.

That said, Sea Limited has made an entry into food delivery through ShopeeFood. Today, it has a presence in Vietnam, Thailand, Malaysia and Indonesia, with plans to launch in Philippines in the immediate future. It is not clear if Shopee has plans to aggressively enter the quick commerce landscape, but it appears to be an inevitable future, as we will discuss later.

In dense cities like Jakarta, Shopee has introduced same-day and instant delivery options (under 2 hours) for select purchases. When a user orders from a nearby seller, Shopee may dispatch a ShopeeFood rider (motorbike courier) to pick up the item immediately, rather than routing through postal delivery. This effectively turns the vast network of marketplace sellers into nodes for quick fulfillment, using the already scaled logistics asset of ShopeeFood.

As Forrest Li, Sea’s CEO, noted, demand for very fast delivery is rising among urban buyers who even show willingness to pay a premium for under-2-hour service, and Shopee saw a 35% YoY increase (Q3 year-on-year) in orders using these faster options in Greater Jakarta.

A critical asset is ShopeeFood. Despite entering the market late, it has scaled rapidly. In 2025, ShopeeFood’s GMV is estimated at USD $3.3 billion, surpassing Foodpanda’s USD $2.5 billion and Gojek’s USD $1.9 billion in food delivery. This makes ShopeeFood the second-largest food delivery platform in Southeast Asia by GMV, with roughly 14% market share, up from about 5% just three years ago.

The picture is even more striking in the four markets where ShopeeFood actually operates. There it holds close to 20% market share. The competitive impact shows up clearly in Grab’s numbers. In ShopeeFood markets, Grab’s share is about 50.5%, versus 67% in markets where ShopeeFood is not present, highlighting ShopeeFood’s role as meaningful competitor.

The strategic logic is that ShopeeFood can serve as a “foot in the door” for quick commerce beyond food. Once a driver network is in place and consumers get used to ordering on Shopee frequently, not just for occasional shopping but daily needs, Shopee can integrate other on-demand offerings. Interestingly, Shopee has taken a different approach to players in China and India. Instead of building a separate quick commerce business, it is compressing delivery time by using assets that are already scaled, such as utilising ShopeeFood riders to fetch and deliver parcels for Shopee orders.

Shopee appears to be closest to Alibaba in terms of its roots and strategy. Like Alibaba, Shopee began as a traditional e-commerce marketplace with a strong focus on third-party sellers, and control over the customer experience. Both have since expanded into adjacent services, including food delivery, while continuing to rely on batch-based fulfilment experience.

Shopee reflects Alibaba’s model in terms of its platform ecosystem, monetisation strategy, and traffic power. Like Alibaba’s Taobao, Shopee generates massive consumer demand through search-driven shopping, price promotions, and in-app engagement. It increasingly monetises this traffic through advertising, seller services, and payments, much like Alibaba does via Taobao/Tmall.

Alongside this, Shopee has been steadily layering in discovery-driven commerce through features such as Shopee Live, short-form video feeds, and algorithmic product recommendations. This shifts part of the shopping journey from pure intent-based search toward browsing and impulse discovery, allowing Shopee to stimulate demand rather than merely capture it. In this sense, Shopee is gradually blending Alibaba’s search-driven marketplace model with elements of TikTok-style content commerce, broadening both user engagement and monetisation opportunities.

Importantly, Shopee is also gradually shifting towards a more B2C and consignment-driven model in selected categories. Through ShopeeMall, brand stores, and more centralised fulfilment arrangements, Shopee is taking greater control over inventory quality, delivery standards, and customer experience. This mirrors the path taken by JD and parts of Alibaba’s ecosystem, where platforms move from being pure marketplaces towards hybrid models that blend third-party sellers with platform-managed inventory to support faster, more reliable fulfilment.

To win in quick commerce, Shopee’s key challenge will be operational standardisation. Its marketplace DNA gives it enormous breadth, but also introduces variability in packaging, fulfilment readiness, and service quality. Moving into instant delivery for higher-value or more fragile goods will require tighter control, clearer merchant standards, and deeper integration between its warehousing, riders, and seller network.

TikTok Shop

TikTok Shop is the newest entrant reshaping Southeast Asia’s e-commerce, taking an attention-first approach by integrating shopping into the wildly popular TikTok short-video social media app. It is the fastest growing e-commerce player, with estimates of about mid double-digit growth in 2025, which is incredible considering the scale it now operates at.

Owned by ByteDance, TikTok brings a fundamentally different DNA. Rather than starting from delivery or marketplace infrastructure, it started from an algorithmic content platform with hundreds of millions of engaged users and added e-commerce functionality on top. Interestingly, it is the only major player in both China and Southeast Asia.

In Southeast Asia, TikTok Shop launched around 2021 and quickly gained traction by leveraging TikTok’s massive user base in countries like Indonesia, Thailand, and Vietnam. Its model is inspired by Douyin (TikTok’s Chinese sister app), where in-app shopping has become hugely successful. In SEA, TikTok Shop has seen explosive growth, although not without regulatory hurdles.

TikTok Shop’s strategy is a unique one. It has positioned itself as a social commerce platform where users discover products through videos and live streams in their feed, rather than through search queries. The idea is that every scroll can become a shopping opportunity. For instance, a makeup tutorial links to the cosmetics being used, a fashion livestream has “buy now” pop-ups for the clothes, etc. However, it is also incentivising users to create content specific for shopping conversion. (This is something Amazon has tried in the past to no avail)

TikTok’s rise is fueled by its hundreds of millions of users in the region and its highly engaging content algorithm. Southeast Asia has a huge TikTok user base. For context, TikTok has over 150 million users in Indonesia alone. This gives TikTok Shop a built-in audience that it can convert into shoppers without them ever leaving the app. TikTok’s algorithm excels at showing users content they didn’t know they wanted, also known as impulse buying.

TikTok Shop is still early in instant commerce, but it is perhaps the most dangerous long-term variable for its competitors. It has unmatched attention density and live-commerce conversion, giving it a unique position to influence where demand flows, even if it does not own delivery (yet). Being the subsidiary of ByteDance in China, its strategy mirrors that of Douyin, dominating user attention and demand creation, despite lacking the same depth of proprietary logistics infrastructure.

TikTok is also beginning to experiment with faster fulfilment, including 1-hour delivery in selected markets and categories, signalling that it understands attention alone is not enough. However, unlike Grab and Shopee, TikTok remains logistics-light and heavily dependent on partners. Its long-term challenge will be building a fulfilment experience that matches the immediacy of its content consumption.

To win in quick commerce, TikTok must evolve from being a demand-generation machine into a reliable commerce platform. That means investing in fulfilment standards, returns handling, customer service, and merchant discipline, especially as it moves into higher-value and more complex product categories.

14. Strategic Positioning: Three Different Plays

The quick commerce strategies of Grab, Shopee, and TikTok reflect their different origins and core competencies. Let’s compare and contrast their models along key dimensions:

(For more context on these 3 competitors, check out this article)

Core Business Model

• Grab exemplifies a “logistics-first” model, building from mobility and delivery services. It focuses on solving the real-world problem of moving people and goods efficiently, then layering commerce on top of that network.

• TikTok Shop represents an “attention-first” model, where the primary asset is consumer attention and engagement; commerce is a way to monetise that attention.

• Shopee represents a “commerce-first” model rooted in search and intent-driven purchasing. Its core asset is not attention or logistics, but demand with clear buying intent. It is monetising that purchasing intent and now progressively layering in speed and content to broaden when and how often that intent is expressed.

Customer Acquisition & Frequency

• Grab and Shopee initially relied on incentives and breadth of selection to seed adoption (e.g., cheap rides, free delivery, massive catalogues). Over time, they deliberately engineered habit formation by expanding everyday use cases and then layering in memberships and loyalty programmes (GrabUnlimited, Shopee’s VIP tiers).

• For instance, Grab moving from occasional rides and weekly grocery shops to daily food orders and even multiple touch-points per day. The result is a shift from promotion-driven usage to embedded, repeat behaviour across verticals.

• At the same time, both platforms have been deliberately increasing their level of control and monetisation intensity. What began as physical advantages (rider fleets, merchant density and local coverage) has progressively turned into a digital edge driven by data, algorithms and product design.

• Platforms are also moving up the stack through greater vertical integration, from handling parts of sourcing and private labels (e.g., GrabMart) to expanding into adjacent verticals such as bookings, reviews, and FinTech. As more activity flows through their ecosystems, software increasingly determines demand allocation and monetisation, compounding their competitive advantages over time.

• TikTok entered, probably somewhat fortuitously through a different strategy, already commanding high daily usage because of its entertainment value. The challenge for them is in converting that usage into purchases.

• Another way we can look at the dichotomy between these players is the “demand-generation vs demand-capture” piece. Grab generates demand by convenience, which is more akin to fulfilling latent needs. Shopee was traditionally more demand-capture (people going onto Shopee when they needed something), however livestreams and tie-ups with YouTube and Meta may change that into a demand-generation machine. TikTok’s commerce strategy revolves around turning passive scrolling into impulse buying, generating demand that might not have existed otherwise.

Logistics Network & Fulfilment

• Grab has the most integrated logistics network suited for quick commerce. Its army of riders is a core asset, giving it control over the customer experience. It operates a decentralised model (drivers pick up from merchants).

• Shopee’s logistics is more hub-and-spoke and warehouse-driven for now, optimised for next-day delivery, though it’s leveraging ShopeeFood riders for instant delivery in some cases.

• TikTok is logistics-light, relying on partners (primarily J&T Express).

• This affects scalability. For instance, Grab can scale quick deliveries city-by-city, but might find it harder to handle large-items or cross-country deliveries. Shopee can handle nationwide distribution through its warehouses and courier partners, but is now tweaking to handle intra-city express. TikTok can scale content virally across countries easily, but fulfilling orders physically is likely to be a challenge and require time.

Merchant/Seller Network

• Shopee has the broadest merchant ecosystem, millions of small sellers plus brands. Through ShopeeMall, it is now the leading platform for brands in Southeast Asia. It is essentially infrastructure for others to sell.

• Grab’s merchant network in quick commerce is currently focused on food & grocery outlets. It curates this network to ensure coverage of popular cuisines and essential goods. Crucially, this is not a generic marketplace that can be copied and pasted across markets, but instead, is a fragmented and localised network that is structurally difficult and time-consuming for competitors to replicate at scale.

• TikTok’s merchant base started with a lot of entrepreneurial individuals and small businesses, some of whom are new to e-commerce but savvy in social media, as well as cross-border sellers from China providing ultra-cheap goods. Over time TikTok is attracting more established brands and retailers to set up official TikTok stores given the platform’s reach.

• Each platform’s seller mix influences customer perception. For instance, Shopee and Grab, having been around for longer, are perceived as more “trusted” for transactions while TikTok is still in a nascent stage and has to prove its reliability.

Monetisation and Revenue Streams

• All three ultimately monetise via transaction commissions and fees, albeit with nuances.

• Grab and Shopee may look similar at a high level, but they are fundamentally different in how they monetise. Grab is fundamentally logistics-led, taking commissions from restaurants (around 20-30% on food orders), charging delivery fees to consumers, and fees on GrabMart orders. It is also building an advertising business (GrabAds reached a USD $236 million annual run-rate in Q4 2024, about 1.7% of deliveries GMV) and generates additional revenue from fintech (payments and lending). Conceptually, Grab’s model is to monetise the movement of goods and skim a small take from each transaction, while upselling financial services over time.

• Shopee, by contrast, is commerce-led and monetises primarily through commissions and seller services. It charges marketplace sellers commissions (roughly 5-8% for regular sellers, higher for Shopee Mall), collects advertising fees from sellers to promote products, and earns logistics fees from both buyers and sellers. On top of that, it also generates FinTech revenue via ShopeePay and SPayLater (transaction fees and interest income). In essence, Shopee’s core monetisation engine is taking a cut of commerce and selling traffic to merchants.

• TikTok Shop is structurally different because it is discovery-led. While it does earn commissions on transactions, a much larger part of its monetisation strategy is tied to advertising and traffic monetisation such as brands paying for ads, boosted posts, and influencer-driven distribution.

In summary, Grab’s logistics-first model gives it control over the delivery experience and high-frequency use cases, but it needs to ensure enough order volume per trip to be profitable and is limited to on-demand categories.

Shopee’s commerce-first model gives it breadth and a deep marketplace integration with payments and logistics, and it is now borrowing the best of both other models (speed from Grab via ShopeeFood integration, and engagement from TikTok via live streams) to fortify its lead.

TikTok’s attention-first model allows for explosive growth by leveraging social virality and new user segments, but it must build the commerce stack (payments, logistics, trust & safety) to truly compete long-term.

All three are increasingly encroaching on each other’s turf. Grab is adding planned e-commerce through scheduled grocery delivery and partnerships with supermarkets. Shopee has entered food delivery and is offering same-day delivery. TikTok is adding marketplace features and expanding their product range. We believe this convergence in their models is inevitable as each platform tries to become the dominant everyday app for consumer spending.

15. What It Takes to Win in SEA Quick Commerce

Across all three platforms, one common requirement is emerging and we believe that is professionalisation and standardisation of delivery. Quick commerce in SEA has to evolve from an ad-hoc, rider-based pickup system if it wants to expand beyond meals and convenience goods.

The next step beyond those products would be scaling into more complicated deliveries and higher-ticket items. To do so, platforms will need a professional delivery crew to handle fragile and bulky items, they will need predictable delivery windows and service levels, and tighter integration beyond inventory, routing and customer communication.

They will have to move from being just “fast” to “reliable and fast”. For instance, Grab will need to deepen its operational stack beyond food and groceries. Shopee will need to reduce variability and impose more structure on fulfilment (this may require a consignment model). TikTok Shop will need to build a commerce backbone (quality control on merchants/sellers, seamless returns workflows) beneath its attention engine.

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16. Southeast Asia vs China

In our view, China is a useful leading indicator for how quick commerce in Southeast Asia is likely to evolve because the structural forces are the same, just playing out on a different timeline.

The cleanest way to understand this is by looking at what has already happened with e-commerce in SEA itself. It is the local precedent. Despite Amazon arguably being the leader at the time, SEA’s e-commerce ecosystem did not develop by following the US playbook, but by adapting lessons from China, because of 2 key reasons: China faced the same structural constraints SEA did at the time (low credit card penetration, fragmented logistics, highly price-sensitive consumers, nascent physical retail businesses), and the close proximity and similarity in culture between the two.

Platforms such as Lazada and Shopee scaled by prioritising supply, liquidity, and marketplace breadth before efficiency, closely mirroring how Alibaba built Taobao in China rather than how Amazon expanded in the US. Crucially, profitability in SEA e-commerce only emerged after sufficient density was achieved, allowing logistics costs to collapse and consumer behaviour to shift decisively online. This matters because quick commerce is following the same sequence (building supply and demand first, absorbing losses early and allowing economics to improve non-linearly once scale is reached).

That said, the market structure in SEA differs significantly from China’s, affecting how scalable and profitable these models can be in the region.

Here are the key differences and their impacts:

• Fragmented Market vs Single Market:

  • China is one unified market of 1.4 billion people under one regulatory regime (with relatively homogenous language/culture for business purposes). Southeast Asia is divided into many countries (ASEAN), with ~700 million people across diverse languages, cultures and regulatory systems.

  • This means a quick commerce player in SEA must duplicate efforts country by country through separate localisations, separate payments integrations and compliance with different laws.

• Payments and Financial Infrastructure:

  • In China, digital payments are ubiquitous (WeChat Pay, Alipay) and almost everyone uses them, enabling seamless cashless quick commerce.

  • In SEA, payments are varied: credit card penetration is low in many countries, cash-on-delivery (COD) is still common for e-commerce (especially in the Philippines, Vietnam, parts of Indonesia). Each country has its favoured e-wallets (OVO/Dana in Indonesia, GCash in Philippines, etc.)

  • This diversity means quick commerce providers had to either create their own payments (GrabPay, ShopeePay) or integrate many options.

• Logistics and Infrastructure:

  • China’s dense megacities and extensive road/rail infrastructure allow economies of scale in delivery, companies like Meituan can deliver within 30 minutes because urban density is high and they have millions of riders in one country coordinating.

  • Southeast Asia has challenges like geography (e.g., Indonesia’s thousands of islands, terrible traffic congestion in cities like Manila or Jakarta) and less developed infrastructure in many areas. Outside of Singapore, logistics in SEA can be quite inefficient.

  • This makes ultra-fast commerce more expensive and patchy in coverage. For example, 15-minute grocery might be feasible in central Singapore or Bangkok, but not in a sprawling city like Jakarta without massive investment in warehouses in every neighbourhood.

• Ecosystem Partnerships vs Self-Sufficiency:

  • In China, quick commerce has evolved into a much deeper and more mature entrepreneurial ecosystem. Platforms like Meituan and Alibaba do not try to build everything themselves. Instead, they rely heavily on ecosystem partnerships such as specialised operators running cloud kitchens, micro-warehouses, brand warehouses, franchise rider networks etc.

  • Many of these partners are effectively founders building businesses on top of the platform’s traffic and infrastructure. This creates a dense, competitive supply layer where innovation, cost reduction, and operational optimisation are pushed to the edge of the ecosystem rather than centralised within the platform.

  • In Southeast Asia, this ecosystem layer is far thinner. There are fewer scaled, specialised operators in areas like micro-warehousing, dark stores, or professionalised last-mile fulfilment. As a result, platforms are often forced to be more self-sufficient, either building capabilities in-house or tightly controlling operations to ensure service quality and reliability. This makes expansion more capital-intensive and slower, but also more necessary in a region where external partners with the right scale, standards, and execution capabilities are still scarce.

In spite of these challenges, Southeast Asia’s digital economy has huge headroom. E-commerce penetration remains at 12.8% of total retail in SEA in 2024 compared to well over 25% in China. This suggests that as infrastructure and trust improve, SEA could see a doubling of e-commerce penetration in the coming years. The scalability might be slower and more investment-intensive due to fragmentation, but the direction is clear.

Another way to see this is the size of e-commerce in SEA compared to China. E-commerce GMV in SEA as of 2025 was roughly $185 billion. China however, is vastly larger, with projections of about $2.2 trillion as of 2025. That is almost 12x the size despite China’s population only being twice as large.

17. How this Converges over the Next 5 Years

Over the next five years, we believe Southeast Asia’s quick-commerce landscape is likely to converge structurally, but not in the way China’s did. We also believe that while the region will move steadily towards faster delivery, higher order frequency, and broader category coverage, it is unlikely to experience a China-style, nationwide subsidy war in the near term.

Instead, competition will likely centre on execution quality, competing between who can deliver faster and cheaper, who can standardise service levels and who can expand into higher-value categories without breaking unit economics.

18. How Big can Quick Commerce be in Southeast Asia?

The right way to think about how large quick commerce can become, is not looking at it as a brand-new market, but rather as existing retail spend that is pulled forward in time. As soon as delivery becomes cheap and reliable enough, spending that was previously planned shifts into immediate consumption, starting from meals, then to daily essentials and eventually non-food categories.

As of 2025, Southeast Asia’s e-commerce GMV is roughly USD $185 billion, while food delivery GMV is around USD $23 billion. By 2030, e-commerce GMV is expected to reach approximately USD $359 billion, implying a CAGR of ~14%. Food delivery and online groceries are among the fastest-growing sub-segments within this pool.

In terms of the short-term base case, we can think of the addressable market being roughly the size of food delivery, because it is essentially food delivery plus a growing layer of convenience and grocery orders riding on the same rider network. In Southeast Asia, the food delivery GMV is around USD $23 billion today.

If we assume food delivery GMV grows at a high-single-digit to low-double-digit rate over the next five years, a reasonable guess for regional food delivery GMV by the early 2030s would be USD $35 billion. We see this as the lower-bound range of the quick commerce market in 2030.

However, the larger target revolves around groceries and daily essentials, beyond just food and convenience. These categories are high frequency, recurring, and have a strong convenience premium. In most Southeast Asian markets, online grocery penetration is still in the low single digits, compared to well over 10-15% in more mature markets.

Let’s take a rough view. Southeast Asia’s total retail market is on the order of USD $1.2 trillion as of 2025 and is projected to reach $1.68 trillion by 2033. If groceries and daily essentials represent roughly 30-40% of that amount, that category alone would be a USD $500 billion annual market. If we assume just 12% of that shifts online over the next decade, that is a $60 billion market in online grocery and essentials GMV.

Now assuming that within the online grocery and essentials pool, 30% of orders in dense urban cores by 2030 migrate to instant or same-day fulfilment as rider density improves, this would imply an USD $18 billion quick commerce opportunity. This would be incremental spend to food delivery and is structurally much higher frequency than most discretionary e-commerce categories.

Beyond food and groceries sits the much larger, but constrained prize of non-food retail. This would include everything that isn’t food or groceries, such as FMCG products like shampoo, cosmetics, daily essentials like detergent, batteries and even apparel, home & lifestyle and consumer electronic products. Again, this would tap into the $359 billion estimated GMV market in 2030. Even in China today, only a minority of non-food e-commerce GMV is fulfilled through instant delivery, because of inventory proximity, working capital reasons and operational complexity.

However, over a long horizon, it is likely fair to assume that about 3-5% of non-food e-commerce GMV could become eligible for same-day or instant fulfilment in dense urban areas. That would still represent between USD $10.8 billion to USD $18 billion of GMV that could, in principle, be contested by quick commerce models.

Combining food delivery, groceries/essentials and non-food e-commerce markets, the quick commerce market in Southeast Asia is likely to be a roughly USD $65 billion market by 2030.

Grab has revealed that GrabMart represents about 10% of its food delivery GMV. Assuming non-food is a 15% share of the entire food delivery market in Southeast Asia today, that would equate to about a $3B market size today. Assuming it becomes an $18 billion GMV market in 2030, that would represent a 43.1% CAGR. That is a pie that every player will want a piece of.

Beyond just the dollar value of this market, quick commerce is not just another vertical to be dominated, but it is critically important, as we have explained during this article, because it is a control point in the stack. The business that dominates quick commerce, will own the habit of customers, which creates a traffic and monetisation flywheel. It is also strategic infrastructure, where owning the last mile makes it difficult to be dis-intermediated by rivals.

19. Why Southeast Asia Won’t See a China-Level Subsidy War Everywhere (Yet)

China’s subsidy wars in food delivery and quick commerce were not just a product of aggressive competition but also enabled by a set of structural conditions that Southeast Asia simply does not have today. While pockets of the region may see intensified competition, the conditions for a broad, region-wide China-style subsidy war are still absent.

1. China is a single, unified market

China is effectively one big market. Yes, there are differences in population density, but when a platform scales within China, it is scaling within a single regulatory framework, a largely shared language, and a unified payments infrastructure. That means learnings, logistics density, and consumer behaviour transfer almost seamlessly from one city to the next. A playbook that works in Shanghai can be replicated in Chengdu or Wuhan with minimal friction.

Southeast Asia, by contrast, is a collection of separate markets stitched together by geography, not economics. Each country has its own rules, currencies, payment systems, and consumer habits. Success in Indonesia does not automatically translate to Vietnam or Thailand, and capital spent in one market rarely strengthens the economics in another.

This fragmentation makes scale harder to achieve, slows down flywheel effects, and significantly reduces the payoff from aggressive, region-wide strategies like China-style subsidy wars.

2. Density is insufficient for extreme subsidy payoffs

China’s megacities have population densities that make ultra-fast delivery economically viable at scale. Millions of orders flow through a compact urban footprint, allowing rider utilisation to rise quickly and unit costs to collapse once volume is high enough.

Most Southeast Asian cities lack this density. Apart from Singapore, Manila, Bangkok, Ho Chi Minh City for instance, many cities in Southeast Asia do not resemble China structurally. For instance, Jakarta, secondary Indonesian cities, Tier-2 and Tier-3 SEA cities will struggle to replicate China’s flywheel economics due to sprawl, geography, or infrastructure.

In essence, Southeast Asia has a handful of dense urban cores that can support quick commerce economics, but it lacks the broad, nationwide urban density that allowed China’s platforms to justify prolonged, all-out subsidy wars. Any subsidy escalation is therefore more likely to emerge selectively, city by city or country by country, rather than across the region all at once.

3. Market structure favours co-existence

Due to the geographical and regulatory differences across SEA, no single platform can easily own everything across all countries. Hence, the incentive to wage an all-out, winner-takes-all subsidy war is much weaker.

For instance, a platform may be strong in Indonesia but weaker in Thailand, or dominant in urban cores but less relevant in secondary cities. This patchwork makes it rational for platforms to defend their strongest positions rather than attempt to crush competitors everywhere at once. In this environment, a China-style, winner-takes-all subsidy war makes little sense. Though, localised subsidy battles in specific strategic markets are increasingly plausible.

4. Players are not ready yet

A key reason Southeast Asia is unlikely to see a China-level subsidy war in quick commerce is simply that the players are not ready for it yet. In China, subsidy wars have happened because the prize is both large and defensible. Today’s subsidy battles in China are being fought over cities where instant commerce is already a daily habit, order volumes are enormous, and unit economics are close enough to breakeven that scale can realistically tip them into profitability. The likes of Alibaba and JD already have strong core businesses to support the extraordinary levels of spending.

Southeast Asia is earlier in that journey. Quick commerce remains concentrated in a small number of dense urban cores, and even there, consumer behaviour is still forming. For many users, instant delivery still remains an occasional convenience rather than a default. The gap becomes even clearer once the market is split into two segments: meals and non-food quick commerce.

Meals (food delivery) is the only part of the market that is approaching behavioural maturity. Grab is already dominant here, with a business almost four times larger than its nearest competitor and larger than all competitors combined, reflecting a category that is close to becoming a default behaviour for many urban consumers. ShopeeFood has grown quickly, from a 5.63% market share in 2022 to 14.67% in 2025, but it is still some distance from the scale and supply density needed to credibly force a region-wide escalation.

We think that likely requires ShopeeFood to approach something like 30% share in its core food delivery markets and for Shopee’s core e-commerce business to be comfortably profitable enough to underwrite the spending. On that basis, the more realistic window for a true escalation in meals is one to two years out.

Non-food quick commerce is much earlier in its adoption curve. Today, GrabMart accounts for only around 10% of GMV and the underlying supply chain and merchant infrastructure are still being built out. Consumer behaviour here remains far from habitual, and there is still limited overlap with Shopee’s core e-commerce business. It is more likely to take several more years for non-food instant retail to reach the density, basket sizes, and operational maturity needed to sustain a China-style subsidy war.

Grab, by virtue of its scale in on-demand and food, is structurally better prepared today. Shopee, despite its strength in e-commerce, is still building out its instant fulfilment stack and remains too light to sustain a prolonged fight. A more plausible inflection point is closer to 2027, when ShopeeFood may have built sufficient share and when Shopee’s core business is profitable enough to underwrite a more aggressive push.

Regarding TikTok Shop, it is gaining share rapidly in e-commerce but remains logistics-light. Its current model is optimised around discovery, content-driven conversion, and merchant-fulfilled or third-party logistics. That is a very different operating problem from quick commerce. Entering quick commerce at scale would require TikTok to build, partner or acquire, an entirely new layer of infrastructure. It would be very capital intensive and operationally complex, structurally outside of TikTok Shop’s current core competence.

20. The End-Game for SEA Quick Commerce

All signs point towards a huge runway for quick commerce growth in Southeast Asia. In the latest digital economy report by Bain, Temasek and Google, e-commerce is expected to become a $359B GMV market by 2030, nearly double the amount in 2025. This represents a CAGR of ~14.2%. Within that, online grocery and food delivery are the fastest-growing sub-segments.

By 2030, much of Southeast Asia’s young population will be in their peak spending years. We believe this digital-native cohort will expect the convenience of quick commerce as a norm. Food delivery, already popular, will become further ingrained, and an everyday habit in urban life.

The result is a larger addressable market for Grab’s and Shopee’s delivery services and more users for content-driven shopping like TikTok. Importantly, as logistics networks expand and adoption grows, quick commerce will become viable throughout more cities, creating a flywheel effect of demand and supply.

Over time, we expect these platforms to move up the commerce stack, expanding beyond food delivery into higher-frequency and higher-value categories through quick commerce. Grab, in particular, will likely be dragged into the quick commerce war, but this should be viewed as a strategic opportunity rather than just a defensive move. Non-food quick commerce materially expands Grab’s addressable GMV. The underlying retail categories it opens up are already more than twice the size of food delivery in Southeast Asia today, and it also deepens its role across the consumer purchase journey.

As these platforms move up the stack and scale builds, we expect monetisation to improve meaningfully. Higher order density and broader merchant coverage should structurally improve cost efficiency, while advertising becomes an increasingly important profit pool. Grab is already targeting advertising revenue to exceed 4% of GMV (from ~1.7% today), while Shopee continues to increase ad penetration. TikTok, inherently an ad-native platform, will naturally integrate commerce ads as it knows users’ content preferences intimately. Even if gross take rates remain competitive or drift lower over time, net monetisation and contribution margins should continue to expand.

As quick commerce volumes grow, economies of scale in logistics should kick in, higher order density means lower cost per delivery. Also, route optimisation, lockers, drones, and robots will further help reduce cost as the technology proliferates across the region.

Looking out to 2030, we believe there will be 3 key regional players in this space: Sea Limited, Grab Holdings, TikTok. However, we do expect there to be some smaller competitors in the market largely due to the complexities of the region. For instance, Alibaba-backed Lazada may remain a contender if it receives more funding from its parent company. Existing convenience-chains with tens of thousands of stores like Alfamart (Indonesia + Philippines), Indomaret (Indonesia), WinMart (Vietnam) will likely remain relevant. These chains could be huge beneficiaries by plausibly setting up their own quick commerce stack or partnering with an existing e-commerce player.

21. Conclusion

Our base case is that Southeast Asia does not get a China-style, region-wide subsidy war in the near term. Instead, we expect country-by-country and city-by-city escalation in the more mature and densest core areas.

In that scenario, Grab’s edge is depth of logistics and regional merchant base. Sea Limited’s edge is its wholistic products and services that captures demand. TikTok’s edge is enormous traffic that create demand out of thin air.

The outcome of the quick commerce battle will be determined by who can serve customers at the lowest cost, with the broadest assortment and the best overall experience. But because each player is attacking the market from a different layer of the stack, this is unlikely to be a winner-takes-all war.

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One of my goals for 2026 is to meaningfully expand my circle of competence by covering many more companies. But if I want to do that without compromising on quality, there’s really only one sensible way to approach it.

I’ll continue publishing my regular deep dives, which are typically 10,000 words or more and aim to cover every aspect of a business in depth. Alongside that, I also want to start sharing work on companies that are still in the early stages of being considered for a full deep dive.

This is a process I’ve long taken, but haven’t documented before. I think doing so might be really helpful for some of you, and hopefully spark some new ideas. After all, the goal of this Substack isn’t just to be a recommendation engine, but an ideation and learning engine, so we can all become better investors together.

I’ll be calling this new series Mini Dives. In each piece, I’ll take a first look at a business and share my personal, nuanced view, covering its competitive landscape, value proposition, and running it through my quality score checklist. I’ll then lay out my current view on the company and what I plan to do next.

These will be shorter than a full deep dive, typically around 3,000 to 5,000 words, and hopefully more digestible for those of you with very busy lives. I hope you find this helpful.

The business we’ll be looking at today is Duolingo. It has been actively discussed in the X community and one that has equal numbers of bulls and bears. The stock is down over 70% from all-time highs in just over 8 months.

The question we’ll attempt to answer today is:

Table of Contents

1. Introduction

2. Value Proposition

3. Business Model

4. Moats & Differentiation

5. Competitive Landscape

6. Financials

7. Bull and Bear Case

8. GabGrowth Quality Score

9. Concluding Thoughts (What I am personally doing)

Read more

Revenue: $906M v $941M est. (+19% YoY, 17% Constant Currency)

EPS: $0.00 v $0.01 est.

Selected Key Metrics

• On-Demand GMV: $6,077M (+21% YoY)

• On-Demand GMV per MTU: $131 (+4% YoY)

• Group MTUs: 50.5M (+15% YoY)

• Loan Portfolio: $1,180M (+120% YoY)

• Adjusted EBITDA: $148M (+54% YoY)

• Adjusted Free Cash Flow: $76M (+10% YoY)

Grab’s earnings for the quarter missed expectations by about 4%. However, much of it can be explained by their affordability strategy which I will dive into later.

That said, FY2025 numbers as a whole were still very strong. Group Adjusted EBITDA margin expanded from 12.7% to 16.4%.

Segment Adjusted EBITDA for each of the 3 segments improved.

Management also gave their outlook for FY2026 and 3-year outlook (the first one since September 2022).

They guided for 20% revenue CAGR over the next 3 years and a 200% increase in Adj. EBITDA, along with an increase in Adj. FCF conversion from 52% in 2024, 56% in 2025 to 80% in 2028.

One last thing to note, management reiterated their 3 key pillars for growth:

• Affordability to widen TAM of audience

• Product led and ecosystem focused execution to increase LTV

• Leveraging technology in AI to unlock efficiency

In this piece, I will break down the earnings in full, highlight key points on management commentary during the call and discuss my personal thoughts in the last section.

Table of Contents

1. Deliveries & Mobility

2. GFin, Financial Services

3. Key Call Commentary

4. Positives & Negatives

5. Conclusion

1. Deliveries & Mobility

Deliveries is Grab’s largest segment by GMV and Revenue.

GMV grew 21% YoY (also 21% on a constant currency basis). Adj. EBITDA margin also grew from 1.8% to 2.2%, tracking closer towards management’s long-term target of 4+% margins.

This growth has been attributed to higher contributions from advertising and gains in operating leverage. On a FY basis, deliveries segment Adj. EBITDA margin grew 35bps to 2.0%.

Of note, the total number of quarterly active advertisers joining Grab’s self-serve platform increased 21% YoY to 228,000 while average spend increased 23% YoY.

Mobility GMV grew 19% YoY on a constant currency basis. However, revenue growth was lower at just 15% YoY due to the focus on affordability.

Yet, segment Adj. EBITDA margin still expanded YoY from 8.4% to 8.6%.

As a reminder, Grab’s long-term steady state margin target for this segment is 9+%.

2. GFin, Financial Services

This was a phenomenal quarter for GFin. The net loan portfolio reached $1.18B, up from $821M just last quarter. That represents 43% QOQ growth and 120% YoY growth.

Management’s year end target was for $1B which has been achieved easily. Segment Adj. EBITDA margin improved from -36.3% to -25.6%. Grab tracks closer towards profitability, which it expects in the 2nd half of this year.

Customer deposits across GXS Singapore and GXBank Malaysia grew to an all-time high of $1.6 billion as of the end of the fourth quarter, compared to $1.2 billion in the prior year period, driven by customer growth, with the majority of depositors also being Grab users.

3. Key Call Commentary

Before I begin, I want to acknowledge that Grab did their first live video earnings call with an IR head taking charge of questions.

It was a much smoother experience and I thought the questions and answers were of higher quality than usual.

On Rumours of Indonesia’s Proposal to Lower Ride-Hailing Commissions

“So we can confirm that the government have not proposed any changes in commission caps. We’re in close consultation with them. And we’re aligned and committed to their ultimate goal, which is improving the welfare of drivers in Indonesia.”

On Superbank IPO

“The highlight was, of course, the IPO of Superbank in December, which came out now, I think, with a $1.8 billion market cap and was incredibly successful, 300x oversubscribed with over 1 million shareholders.

And I believe at this point, we’ve got more shareholders in Superbank than any other stock on the IDX. So that’s just an indication of the potential of the market for Financial Services, and we’re just getting going now with an increase in velocity to be expected in 2026.”

On Grab’s AV Strategy

“You may actually have seen us make, as you talked about just now, small minority investments. Now these position us in Southeast Asia in a way where we can have a geopolitical and technological hedge because we can partner global leaders across both U.S. and China ecosystems.

Now this agnostic approach allows us to leverage this unique position we are in with the ability to take the best technology from the world to adapt it to specific nuances of Southeast Asian infra.”

Singapore as the Blueprint for AV Strategy

“Over the next 3 years, you asked, we see actually Singapore as our blueprint. You look at Ai.R. Ai.R is our first public AV shuttle service in Singapore’s Punggol district.

That’s a great example. Ai.R has covered over 25,000 kilometers with zero safety critical incidents or near misses. This is the highest mileage recorded and the most data collected by any AV operator in Southeast Asia.”

Grab’s Product Strategy Bearing Fruit

“The product strategy is working. We will continue. We updated the new product initiatives in Deliveries when we last updated at the half year, contributed to about 1/3 of our GMV. On a full-year basis, I can tell you that now is represented by almost half, so 46% year-on-year GMV growth from our new products, so a massive contribution.

Just to summarize what the product strategy has been and what we will continue to focus on, so the ladder pricing strategy is working. Affordability drives a lot better frequency. So Saver gives us 1.5x higher frequency than the average. And the high-value customers are here in Southeast Asia as well, less price sensitive, looking for limo rides to airports, et cetera. So we’ll continue to grow at the top end of the ladder also, allowing us to manage the margin mix very nicely, as you saw in the overall results.”

On the Stash Acquisition

“One is it’s got a very strong IP. It’s got a strong talent pool and a platform that we don’t have today.

If you look at Financial Services as a business, what do we have? We have a very strong payments, we have a strong lending business, which is continuing to scale, we have a big deposit base over 7 million customers on the deposit side on the banking side of the house.

What’s missing? We don’t have an investing platform today. And that’s really critical for us as we continue to complete the full picture of Financial Services in Southeast Asia or also in other parts of the market where Stash operates today.

Now it is a positive EBITDA business today. It is generating free cash flow positive, and we see this business generating $60 million in EBITDA in 2028. So it’s an accretive business that we see. But really, it’s important that we also serve our user base today, not only in extending loans, but also teaching them how to save. It’s critical in terms of our mission for the underserved, especially on Financial Services.

We expect to close this transaction sometime in Q3 or Q4. It’s a great team. We already have over 1 million customers that we are continuing to serve that they have continued to prove that, that product works. And as they continue to build that product set out, they’re going to continue to penetrate the U.S. market, but also over time, we’ll introduce the product here in Southeast Asia.”

4. Positives & Negatives

Positives:

1. Headline number was misleading

Top-line missed by 4% but this could be explained by Grab’s strategy to sacrifice short-term numbers for longer-term engagement and organic growth.

Partner incentives were up 40% this Q, while Consumer incentives were only up 14%. This is targeted to drive up TAM expansion and adoption, which they alluded to during the call, and eventually leads to stronger organic growth through repeat customers.

These higher incentives act as contra revenue, mechanically depressing reported revenue growth (with part of it also flowing through cost of revenue).

If Grab had increased partner incentives in line with consumer incentives instead, roughly $53M of contra revenue would have been “saved,” which more than covers the revenue shortfall versus estimates.

2. The larger picture is very much on track

This is a very impressive graphic, especially considering seasonality effects didn’t disrupt the trajectory.

Going from -125% Adj. EBITDA margin to 16% Adj. EBITDA margin in 4 years is a major feat that Grab doesn’t get enough credit for.

3. Southeast Asia remains very underpenetrated

Despite Grab now having over 50 million monthly transacting users, there is still tons of room for growth.

Indonesia, a country with 200 million users, only have 4% of users as MTUs. This is a massive growth area and Grab is well positioned to benefit. This is precisely why they are focusing on the 3 pillars of growth and I believe double-digit growth can be hit for the coming decade.

4. GrabMart is a huge growth driver

Mart is growing 1.7x faster in GMV compared to Food, with 1.6x the AOV. During the call, COO Alex Hungate also highlighted the opportunity:

“In ASEAN, the modern retail penetration is less than 40% of the overall grocery market. And then online grocery penetration is even lower at less than 3% in the majority of our markets. That compares with much higher numbers in U.S., China, U.K. of 15%, 20%, even 30% in some of those markets.”

5. Cost to serve is down massively

Negatives:

1. Top-line miss

It’s not great that Grab has missed top-line estimates for the 2nd consecutive quarter (although last one was a very near miss <1%).

Management will need to spur growth through new product types which they are trying.

2. Capital Allocation

The $500M buyback and $425M acquisition of Stash is generally a net positive, utilising the massive net cash Grab has.

At these prices, I believe Grab is very cheap, and it would be a great idea for management to repurchase shares. The acquisition is relatively reasonably priced in my view.

However, the question remains around where they intend to deploy the other $5B. If the GoTo acquisition is unlikely to happen, I believe management should look elsewhere to allocate capital, including authorising much larger share buyback programs, considering Grab is now very healthily FCF positive.

5. Conclusion

My initial view of the quarter was negative, unsurprisingly, due to the top and bottom-line misses.

However, upon further review. I believe this was generally an above average quarter. I’ll give it a B-.

In 2 months, we are likely to see Grab’s Product Day event which was a massive success in 2025 with those new products contributing heavily to spurring growth and increasing efficiency throughout the organisation. I am looking forward to it.

I remain optimistic in Grab, especially at these prices. I’ve detailed my thoughts on Grab as an investment for the year in this piece that you might want to consider reading:

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S&P 500: +0.99%
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January has turned out to be a very volatile month. We’ve had the kidnapping of Venezuela’s President, a precious metals run-up, concerns over the AI bubble and the corresponding capital spending, worries about AI pressuring software companies’ business models, more layoffs and discussions over the Fed chair.

On January 28, the S&P 500 hit an all-time high of 7,002.28, breaking above the 7,000 psychological barrier. While the index has continued grinding higher, some sectors have been notably weak, such as tech and software.

Portfolio Performance (Since Inception)

(Portfolio Inception Date: 27th October 2023)

Portfolio: +180.36%

S&P 500: +67.72% (Outperformance: +112.64%)

NASDAQ: +89.40% (Outperformance: +90.96%)

Portfolio Performance (YTD)

Portfolio: -5.68%

S&P 500: +1.37% (Underperformance: -7.05%)

NASDAQ: +0.97% (Outperformance: -6.65%)

Portfolio reviews are exclusively for paid subscribers. If you would like to gain access to my portfolio holdings, deep dives, and tons of other articles, do consider subscribing.

I post several articles per month, ranging from extensive 50-60 pager deep dives on the most interesting businesses I can find, to shorter articles on valuations, market musings and specific verticals/geographies.

In the past month, I’ve shared these articles with subscribers:

Free subscribers get access to posts too, of course, with free earnings reviews and occasional articles.

In the next few segments, I discuss my general thoughts on the market, portfolio companies, performance, portfolio allocation and portfolio changes.

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Once that habit has formed, it has become increasingly difficult for consumers to go back to their old ways.

In the US, food delivery has scaled into a US$100B+ annual GMV market. DoorDash alone is at a $100B annualised GMV run-rate as of Q3 2025. (Key to note that this includes grocery and convenience delivery at ~25-30%)

China is a whole level above. It processes between 180-200 million orders per day, translating to 70+ billion orders per year, across food, groceries and local retail. This adds up to ~$300B in annual GMV. Meituan, the leading food delivery business in China, processes over $150B in food delivery GMV annually. Food delivery in China is no longer a vertical, but a demand engine for the entire local services economy.

Southeast Asia today sits at a much earlier point on the same curve, but the numbers are already meaningful. Regional food delivery GMV is estimated at $22.7B as of end-2025 with roughly 8.5-9.5 million daily orders. This is still only a fraction of China and the US on an absolute basis, but it is inevitable that penetration rates, order frequency and unit economics improve over time.

In this piece, we run through the key takeaways from food delivery in Southeast Asia in 2025, what to expect in 2026, the key players moving forward and my personal perspective of the space.

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