500.com widens net loss as Q1 revenue declines
China’s lottery operator, 500.com reported revenue of $2.1 million for the first quarter, down 63 percent year-over-year.
Despite the drop, shares in the company jumped 2 percent, to $11.32 apiece, by midday Wednesday.
The majority of 500.com’s revenue came from its online lottery betting and online casino in Europe, The Multi Group Ltd. The company said that it contributed 76 percent of the revenue in the quarter. The Multi Group, based in Zebbug, Malta, was founded in 2015 and acquired by 500.com in July 2017.
“We acquired TMG in July 2017, and this acquisition has significantly increased our revenue,” Zhengming Pan, the chief executive officer of500.com, said in a statement Tuesday evening.
Net loss attributable to 500.com was $13.9 million, or 33 cents per American depositary share, for the first quarter, compared with $10.2 million in the same period of 2018. The Shenzhen-based company said its loss was due to an impairment provision of $21.8 million provided for long-term investment during the fourth quarter last year.
The company said it does not expect to issue guidance until it receives instructions in the resumption of online sports lottery business from its regulators.
Online purchases for lottery products have been suspended since January 2015 when the regulators officially issued Self-Inspection Notice in order to maintain stability of Chinese lottery market. That year,500.comterminated all online lottery sales without further revenue.
Apart from the suspended online sales, the company made progress in the traditional channels to sell sports lottery tickets in March 2018. In the statement, 500.com stressed its cooperation with the China Sports Lottery Administration Center, the agency in charge of the issuance and sale of sports lottery products in China. According to the agreement, the company is to develop physical channels to sell sports lottery tickets in Tianjin, Hunan, Hubei, Guangxi, and several other areas in China.
Additionally, the company announced a change in its management. Xudong Chen, with background in Tsinghua Holdings Corp. Ltd. and Lenovo Group Ltd., has been appointed as a director and chairman of the board, effective June 1, 2019.
“We will continue to look for additional opportunities to enhance value for our shareholders,” Pan said.