Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

For a publicly traded company, Sea Ltd. is sure acting like a startup.

The Southeast Asian games and e-commerce provider just posted stronger third-quarter revenue, but that came at the expense of wider losses.

It's still early days and maybe management deserves a bit of breathing room. But deciding to list in New York means Sea, which raised $884 million last month, is now in the big league and needs to start proving it deserves to be viewed accordingly.

Of greatest concern is that the Singapore-based company's top-line growth isn't showing any economies of scale. Revenue, for example, fell 7.3 percent from the prior quarter and inched up 3.9 percent year-on-year. Operating expenses, on the other hand, ballooned 59 percent from the previous three-month period and doubled from a year earlier.

King Tide
Sea's rising expenses aren't resulting in solid revenue growth
Source: Sea, Bloomberg

This cost surge was chiefly due to an increase in marketing spending. For a startup, such spikes in promotional expenses tend to be justified by the resultant boost in user numbers or transaction turnover. For Sea, neither metric showed an impressive improvement, indicating diminishing returns on marketing expenditure.

That Sinking Feeling
Key non-financial metrics at Sea are also slowing, despite a big marketing push
Source: Sea company filings

This alone warrants close attention. If Sea's continued promotional spending fails to ignite its financial and non-financial metrics, then it's not only going to burn through a lot of money, but also investor goodwill.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at

To contact the editor responsible for this story:
Katrina Nicholas at