Results 2020

500.com posts 2020 net loss of RMB138.5m

| By Conor Mulheir
Chinese lottery service provider 500.com has released its financial results for the full year 2020 and Q4 2020, showing an adjusted net loss of RMB138.5m (£15.6m/€17.8m/$21.5m) for the year.

Net revenue for the 12 months ended 31 December 2020 amounted to RMB21.8m, down 45.9% from the same period in 2019.

After operating expenses of RMB 222.6m, the operating loss for the supplier was RMB190.8m, down 70.3% from 2019. However, when excluding irregular or non-cash expenses, its operating loss stood at RMB135.4m, down 46.3%.

The net loss attributable to 500.com was RMB223.2m, down 65.7% from 2019. If irregular expenses are excluded, its net loss stood at RMB138.5m, compared to RMB245.7m in 2019.

For the three months ended 31 December 2020, net revenue was RMB9m, a slight increase from the RMB8.6m brought in for Q4 2019.

Net revenues during the fourth quarter of 2020 primarily consisted of RMB5.6m in contribution from the company’s online lottery betting and online casino in Europe through its TMG subsidiary, accounting for 62.2% of total net revenues.

The increase in revenue from Q4 2019 was mainly attributable to an increase of RMB2.3m in revenue contribution from TMG, and an increase of RMB600,000 in sports information services in China which have been provided since early 2020.

Operating expenses for the fourth quarter were RMB60.9m, down 34.2% from RMB92.5m in Q4 2019, but up 8.4% from RMB56.2m in Q3 2020.

The year-on-year reduction in operating costs in Q4 of 2020 was caused mainly by a decrease of RMB13.7m in bad debt provision, a decrease of RMB11m in depreciation related to an office lease in Shenzhen and impairment of acquired intangible assets in 2019.

Further savings on operating costs were made due to a decrease of RMB6.1m in rental expenses, resulting from the partial termination of the office lease in Shenzhen and the termination of office leases in Hong Kong and Japan.

500.com saved a further RMB4.9m in expenses for employees with a due a reduction in headcount, which also reduced travelling expenses by RMB1.2m. A change in TMG’s marketing strategy also saved RMB1.1m in marketing costs.

Net loss attributable to 500.com for Q4 2020 – with irregular and non-cash expenses excluded – was RMB37.5m, compared to RMB69.4m in Q4 2019, and RMB31.6m for Q3 2020.

The supplier recently pivoted its business model to focus on the cryptocurrency and blockchain industries, bringing in Xianfeng Yang as its new chief executive in January.

Yang has experience in the cryptocurrency industry, having previously led the construction and operation of the big data centre for 500.com’s subsidiary, Loto Interactive.

500.com announced it would acquire a majority stake in Loto Interactive later in January, increasing its share in the company from 33.7% to 54.2% in a deal worth around HK$105m (£9.9m/€11.2m/$13.5m).

After announcing its intention to purchase around $14.4m worth of Bitcoin mining machines from unnamed sellers in January, it later agreed in February to acquire up to 15,900 more machines in 2021 from two more sellers.

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