500.com hit by new Swedish regulations as revenue drops in H1
Chinese online sports lottery provider 500.com has cited the ongoing impact of new regulations in Sweden as the primary reason behind a sharp year-on-year decline in net revenue during the six months to June 30, 2019.
Net revenue totalled RMB25.4m (£3.0m/€3.2m/$3.6m) in the six-month period, down from RMB68.8m in the corresponding period last year.
500.com was able to offset this decline partially by cutting its operating expenses from RMB226.5m in the first half of last year to RMB199.1m. This was primarily achieved by slashing sales and marketing costs from RM43.0m to RMB24.3m, while service costs were also down from RMB41.0m to RMB 33.5m.
However, this was not enough to stop 500.com from posting an increase in the operating losses from continuing operations from RMB148.9m to RMB235.6m.
500.com also reported that loss before income tax widened from RMB143.8m to RMB235.0m, while net loss from continuing operations grew from RMB122.2m to RMB234.6m.
In terms of its performance in the second quarter, the results made for similar reading, with net revenue slipping 63.5% year-on-year to RMB11.1m.
500.com put this down to a website migration in connection with the conversion of TMG’s Swedish licence, which required users to re-register. The provider also noted a decrease of RMB3.1m after halting its sports information services in China in March 2019.
Operating loss from continuing operations in the three months to June 30 came in at RMB138.3m, compared to RMB72.0m in Q2 if last year, while net loss from continuing operations was up from RMB50.2m to RMB141.1m.
Analysing the results, chief executive Zhengming Pan remained upbeat, focusing on the provider’s new agreements in its native China.
“We have entered into framework agreements with Tianjin, Hunan and several other provinces and cities in China to assist them in developing physical sales channels of sports lottery tickets,” Pan said.
“We also have started operations in Tianjin, Hunan, Hubei, Guangxi and several other provinces and cities in China. We will continue to look for additional opportunities to enhance value for our shareholders.”