And investors’ worst fear comes to reality.
Chinese online sports lottery operator 500.com Ltd. has yet again failed to deliver revenue from its core product as the temporary suspension of online lottery sales in China carries on during the second quarter of 2016.
In a disclosure to the New York Stock Exchange, 500.com reported that total purchase amount of sports lottery was nil, compared with nil for the first quarter of 2016, and nil for the second quarter of 2015.
Net revenues of 500.com were RMB1.2 million (US$200,000), compared with RMB2.2 million (US$300,000) for the first quarter of 2016, and nil for the April-June period of 2015.
According to 500.com Chief Executive Officer Zhengming Pan, the revenue of the online sports lottery firm is still negatively affected by the voluntary and temporary suspension online lottery sales.
“We voluntarily and temporarily suspended our online lottery sales operations in response to the promulgation of the Self-Inspection Notice. Such temporary and voluntary suspension materially and adversely impacted our financial and operational results for the second quarter of 2016,” he said. “We want to restate that the Company was one of the two entities approved by the Ministry of Finance in 2012 to provide online lottery sales services on behalf of the China Sports Lottery Administration Center.“
The Shenzen-based sports lottery, on the other hand, incurred a RMB89.4 million (US$13.5 million) operating loss, compared with operating loss of RMB97.3 million (US$14.67 million) for the first quarter of 2016, and operating loss of RMB96.4 million (US$ 14.55 milion) for the second quarter of 2015.
Non-GAAP operating loss was RMB40.7 million (US$6.1 million), compared with non-GAAP operating loss of RMB49.3 million (US$ 7.44 million) for the first quarter of 2016, and non-GAAP operating loss of RMB45.7 million (US$6.9 million) for the second quarter of 2015.
Net loss attributable to 500.com was RMB27.7 million (US$4.2 million), compared with net loss of RMB81.4 million (US$12.29 million) for the second quarter of 2015. For the first quarter of 2016, the net loss of 500.com is at RMB90.9 million (US$14.1 million).
Despite the negative data, Pan assured investors that they are working closely with the China Sports Lottery Administration Center to develop a management system.
“To the best of the Company’s knowledge, the approval by the Ministry of Finance for the Company to provide online lottery sales services on behalf of the China Sports Lottery Administration Center is valid and has not been revoked or amended as of the date of this earnings release.”