Chinese provider of online sports lottery services 500.com Ltd. reported today its financial results for the quarter ended June 30, 2016. Here it is important to note that all sports lottery administration centers to which the company had provided its options have temporarily suspended online lottery purchases as of March 2015. As a result, 500.com did not generate net revenue from sports lottery, its core business, during the second quarter of 2016.
The temporary suspension of online lottery products sales followed the issuance of a Self-Inspection and Self-Remedy of Unauthorized Online Lottery Sales notice by the Chinese General Administration of Sports, Ministry of Finance, and Ministry of Civil Affairs. The said notice was introduced on January 15, 2015.
During the three months ended June 30, 2016, 500.com generated overall net revenue of CNY1.2 million ($0.2 million) compared to no net revenue for the same quarter of the previous year. The company said that the revenue reported came mainly from rendering of data maintenance and technical services by the Sumpay.cn business.
In March, 500.com announced that it had disposed of its 63% interest in the afore-mentioned provider of third-party payment services for the total amount of CNY359.1 million. The lottery company said in today’s statement that following the sale, it recognized a gain of CNY64.8 million for the second quarter of the year.
Operating expenses for the three-month period ended June 30, 2016 totaled CNY96.2 million, down 0.7% year-on-year. The drop in expenses was mainly attributed to reduced advertising costs. 500.com also reported operating loss of CNY89.4 million for the quarter in review, compared to operating loss of CNY96.4 million generated over the same three months of the previous year. On a non-GAAP basis, operating loss amounted to CNY40.7 million, down from CNY45.7 million posted this time last year.
Net loss attributable to the Chinese lottery company totaled CNY27.7 million. The amount of CNY81.4 million was reported in net loss for the three months ended June 30, 2015.
On a non-GAAP basis, 500.com-attributable net income amounted to CNY21 million. Non-GAAP net loss of CNY30.8 million was reported for the second quarter of 2015.
Commenting on the posted results, 500.com CEO Zhengming Pan said that they were negatively affected by the voluntary and temporary suspension online lottery sales. The executive further explained that they have made the decision to suspend online operations so as to facilitate the China Sports Lottery Administration Center in developing an effective online lottery sales management system and that once the said system is finished, the company hopes to be able to resume the provision of its services.
