Why fintech arms of GoTo, Grab, Sea deserve more attention

The performance of Southeast Asian tech giants’ fintech businesses used to be something of an after-thought. That was understandable, since these companies got their start in other segments – mobility for GoTo and Grab, and gaming for Sea.

As these companies broadened into financial services, they themselves stressed that their fintech businesses were in their early stages, and would present the results of these segments only after their “main” business units.

Photo credit: Tech in Asia

Indeed, for a while, the fintech units of these firms accounted for a small portion of their overall revenue. In 2021, fintech revenue was only 7% of GoTo’s top line, while the figures for Grab and Sea were 4% and 5%, respectively.

However, those figures have risen steadily over the past few years. As their most recent results show, the time has come for investors to sit up and pay attention to the fintech businesses of these companies.

SeaMoney overtakes Garena

Currently, Sea’s financial services business – SeaMoney – is the biggest of its peer group and the only one that is profitable.

SeaMoney was established in 2014, giving it a head start over GoTo Financial’s GoPay, which was created in 2016, and Grab Financial, which launched in 2018.

But they are all growing quickly. In the first quarter of 2024, the fintech units of GoTo and Grab were the fastest-growing divisions for each firm.

Taken on its own, that isn’t new, and is to be expected for businesses that are younger and growing off a smaller base.

However, these fintech businesses are reaching a tipping point, where their scale and high growth rates are beginning to make a material difference to overall performance.

In fact, in the most recent quarter, SeaMoney overtook gaming arm Garena to become Sea Group’s second-biggest business by revenue. This may be a sign of things to come for Grab and GoTo as well.

Crucially, SeaMoney currently sports a higher profit margin than the 10% Sea Group’s ecommerce unit Shopee achieved in Q1 2023 – its all-time high – although Garena has better margins.

While Grab’s and GoTo’s fintech units are still loss-making, if both units can achieve SeaMoney’s current margins, this will boost overall group profitability.

In their recent earnings calls, GoTo said its fintech business is expected to be adjusted EBITDA positive by the end of 2025, while Grab is aiming to achieve break even for its fintech unit by the second half of 2026.

Different playbooks

On or off

What could go wrong?

Beyond credit