Shares of Sea-Limited (SO 11.85%) rallied on Tuesday, gaining 11.5% as of 2:35 p.m. ET.

The Southeast Asian e-commerce, fintech and gaming company today reported earnings that were somewhat mixed compared to analyst estimates, but showed continued improvement in all three segments.

Sea’s comeback is underway

Sea Limited has been one of the darlings of the pandemic era, reaching a high of $372 per share in late 2021. So with a share price in the mid-$60s before the earnings release, the stock may have been ready for a rebound.

Total revenue rose 23% to $3.81 billion, beating analyst estimates. Earnings per share of $0.14 based on generally accepted accounting principles narrowly missed estimates of $0.19. Although overall earnings did not meet expectations, momentum within individual business segments appears to have been sufficient to satisfy investors.

Importantly, Seas gaming division, led by the hit game Free Fireplayed a key role in the stock’s rise, but also in the subsequent decline after the peak of the pandemic. Although gaming is Sea’s weakest segment in terms of revenue, it is actually the one with the highest profits.

This division has suffered since the beginning of 2022, but in recent quarters Free Fire‘s numbers have stabilized and started to rise again. After hitting a low of 528.7 million in Q4 2023, daily active users have increased every quarter since then, reaching 648 million in Q2, up 19% year over year.

And while Shopee’s all-important e-commerce business saw a slight decline in earnings before interest, taxes, depreciation and amortization, the second quarter was the third consecutive quarter of earnings improvement since the company returned to growth last year.

After the company decided to reinvest in growth investments in the third quarter of last year, these appear to be paying off. While the e-commerce bottom line may have been responsible for the drop in profits, management also increased Shopee’s gross merchandise volume forecast for the year to 20% growth, up from the original target of over 10%.

The gaming division showed stronger signs of recovery and Shopee’s investments resulted in the expected growth and reduced losses. These were the two main things investors wanted to see.

Can Sea reach new highs soon?

Sea stock is unlikely to return to the high-$300s anytime soon, but given time, there’s certainly a chance. The stock has slumped since late 2021, but management has navigated the post-pandemic period impressively, first cutting costs to boost profitability and then returning to growth when conditions dictated.

Sea’s impressive track record in achieving its business goals is a good sign, as the company has now established itself as a market leader in the high-growth Southeast Asian economy with three different business segments.