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Deutschland SHENZHEN, China, Feb. 27, 2020 /PRNewswire/ -- 500.com Limited (NYSE: WBAI) ("500.com," "the Company," "we," "us," "our company," or "our"), a leading online sports lottery service provider in China, today reported its unaudited financial results for the fourth quarter and full year ended December 31, 2019.
Suspension of Online Sports Lottery Sales in China
All provincial sports lottery administration centers to which the Company provided sports lottery sales services have suspended accepting online purchase orders for lottery products in response to the Notice related to Self-Inspection and Self-Remedy of Unauthorized Online Lottery Sales (the "Self-Inspection Notice"), which was jointly promulgated by the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sports of the People's Republic of China on January 15, 2015. In response to the Self-Inspection Notice, on April 4, 2015, the Company decided to voluntarily suspend all online lottery sales services. As a result of the provincial sport lottery administration centers' decision to suspend accepting online lottery orders and the Company's voluntary suspension of all online sports lottery sales services in China, the Company has not generated any revenue from these services since April 2015.
Temporary Suspension of Operations in Sweden
The Multi Group ("TMG"), a Malta-based subsidiary of the Company, has temporarily suspended its operations in Sweden as TMG did not complete the renewal of its e-Gaming license before it expired. The Company has promptly issued 6-K report on January 13, 2020 and provided information update through 6-K report on February 20, 2020. TMG has submitted all the application materials and is in close communication with Sweden's eGaming regulatory authority to complete the renewal process as quickly as possible. The Company's revenues during the first quarter of 2020 have been materially and adversely impacted by the temporary suspension of TMG's operations in Sweden. Revenue generated by TMG accounted for approximately 89.7% of the Company's total net revenues during the fiscal year ended December 31, 2019, of which approximately 61.3% was generated from Sweden.
Fourth Quarter 2019 Highlights
- Net revenues were RMB8.6 million (US$1.2 million), compared with net revenue of RMB9.8 million for the third quarter of 2019, and net revenue of RMB27.2 million for the fourth quarter of 2018.
- Operating loss was RMB298.7 million (US$42.9 million), compared with operating loss of RMB98.4 million for the third quarter of 2019, and operating loss of RMB95.3 million for the fourth quarter of 2018.
- Non-GAAP[1] operating loss was RMB60.1 million (US$8.6 million), compared with non-GAAP operating loss of RMB52.3 million for the third quarter of 2019, and non-GAAP operating loss of RMB70.1 million for the fourth quarter of 2018.
- Net loss attributable to 500.com was RMB307.9 million (US$44.2 million), compared with net loss attributable to 500.com of RMB95.8 million for the third quarter of 2019, and net loss attributable to 500.com of RMB247.7 million for the fourth quarter of 2018.
- Non-GAAP net loss attributable to 500.com was RMB64.5 million (US$9.3 million), compared with non-GAAP net loss attributable to 500.com of RMB49.7 million for the third quarter of 2019, and non-GAAP net loss attributable to 500.com of RMB93.2 million for the fourth quarter of 2018.
- Basic and diluted losses per ADS were RMB7.16 (US$1.03).
- Non-GAAP basic and diluted losses per ADS were RMB1.50 (US$0.22).
[1] Non-GAAP financial measures exclude the impact of share-based compensation expenses, impairment of |
Full Year 2019 Highlights for Continuing Operations
- Net revenues were RMB39.7 million (US$5.7 million), compared with net revenues of RMB126.1 million for full year 2018.
- Operating loss was RMB634.4 million (US$91.1 million), compared with operating loss of RMB344.5 million for full year 2018.
- Non-GAAP operating loss was RMB243.6 million (US$35.0 million), compared with non-GAAP operating loss of RMB235.9 million for full year 2018.
- Net loss attributable to 500.com was RMB636.4 million (US$91.4 million), compared with net loss attributable to 500.com of RMB462.9 million for full year 2018.
- Non-GAAP net loss attributable to 500.com was RMB240.8 million (US$34.6 million), compared with non-GAAP net loss attributable to 500.com of RMB225.0 million for full year 2018.
- Basic and diluted losses per ADS were RMB14.85 (US$2.13).
- Non-GAAP basic and diluted losses per ADS were RMB5.62 (US$0.81).
Fourth Quarter 2019 Financial Results
Net Revenues
Net revenues were RMB8.6 million (US$1.2 million) for the fourth quarter of 2019, representing a decrease of RMB18.6 million or 68.4% from RMB27.2 million for the fourth quarter of 2018 and a decrease of RMB1.2 million or 12.2% from RMB9.8 million for the third quarter of 2019. Net revenues during the fourth quarter of 2019 primarily consisted of RMB8.5 million (EUR1.1 million) in revenue contribution from the Company's online lottery betting and online casino in Europe through TMG, which accounted for 98.8% of total net revenues. The year-over-year decrease was mainly attributable to a decrease of RMB13.8 million associated with TMG's website migration in connection with the conversion of its Swedish license at the beginning of 2019 which required users to re-register their accounts and resulted in a decrease in users, and a decrease of RMB4.8 million associated with the ceased operations of sports information services in China in March 2019.
Operating Expenses
Operating expenses were RMB84.1 million (US$12.1 million) for the fourth quarter of 2019, representing a decrease of RMB39.5 million or 32.0% from RMB123.6 million for the fourth quarter of 2018, and an increase of RMB4.9 million or 6.2% from RMB79.2 million for the third quarter of 2019. The year-over-year decrease was mainly due to a decrease of RMB10.0 million in share-based compensation expenses associated with share options granted to the Company's employees, a decrease of RMB8.7 million in marketing and promotional expenses relating to a change in TMG's marketing strategy, a decrease of RMB7.5 million in expenses for employees, a decrease of RMB4.4 million in consulting expenses, a decrease of RMB3.2 million in travelling expenses, a decrease of RMB3.2 million in platform service costs for TMG associated with its reduction in online lottery and online casino operations, a decrease of RMB2.5 million in lottery insurance costs, a decrease of RMB1.5 million in depreciation and amortization associated with leasehold improvements, a decrease of RMB1.4 million in account handling expenses, a decrease of RMB1.0 million in rental expenses and a decrease of RMB0.8 million in server hosting costs, which were partially offset by an increase of RMB5.9 million in bad debt provision of receivables. The sequential increase was mainly due to an increase of RMB5.7 million in bad debt provision of receivables and an increase of RMB4.7 million in expenses for employees, which were partially offset by a decrease of RMB1.4 million in platform service costs for TMG associated with its reduction in online lottery and online casino operations, a decrease of RMB1.1 million in lottery insurance costs, a decrease of RMB1.1 million in rental expenses, a decrease of RMB0.7 million in depreciation associated with physical sales terminals and a decrease of RMB0.7 million in regulatory and compliance fees.
Cost of services was RMB12.2 million (US$1.8 million) for the fourth quarter of 2019, representing a decrease of RMB8.4 million or 40.8% from RMB20.6 million for the fourth quarter of 2018, and a decrease of RMB3.9 million or 24.2% from RMB16.1 million for the third quarter of 2019. The year-over-year decrease was mainly attributable to a decrease of RMB3.2 million in platform service costs for TMG associated with its reduction in online lottery and online casino operations, a decrease of RMB2.5 million in lottery insurance costs, a decrease of RMB1.4 million in account handling expenses and a decrease of RMB0.8 million in server hosting costs. The sequential decrease was mainly due to a decrease of RMB1.4 million in platform service costs for TMG associated with its reduction in online lottery and online casino operations, a decrease of RMB1.1 million in lottery insurance costs, a decrease of RMB0.7 million in regulatory and compliance fees and a decrease of RMB0.7 million in depreciation associated with physical sales terminals.
Sales and marketing expenses were RMB9.1 million (US$1.3 million) for the fourth quarter of 2019, representing a decrease of RMB13.7 million or 60.1% from RMB22.8 million for the fourth quarter of 2018, and a slight increase of RMB0.1 million or 1.1% from RMB9.0 million for the third quarter of 2019. The year-over-year decrease was mainly attributable to a decrease of RMB8.7 million in marketing and promotional expenses relating to a change in TMG's marketing strategy, a decrease of RMB2.5 million in expenses for employees, a decrease of RMB1.3 million in share-based compensation expenses associated with share options granted to the Company's employees and a decrease of RMB0.6 million in travelling expenses.
General and administrative expenses were RMB50.9 million (US$7.3 million) for the fourth quarter of 2019, representing a decrease of RMB13.1 million or 20.5% from RMB64.0 million for the fourth quarter of 2018, and an increase of RMB7.8 million or 18.1% from RMB43.1 million for the third quarter of 2019. The year-over-year decrease was mainly due to a decrease of RMB6.5 million in share-based compensation expenses associated with share options granted to the Company's employees, a decrease of RMB4.2 million in consulting expenses, a decrease of RMB3.8 million in expenses for employees, a decrease of RMB2.4 million in travelling expenses and a decrease of RMB1.3 million in depreciation and amortization associated with leasehold improvements, which were partially offset by an increase of RMB5.9 million in bad debt provision of receivables. The sequential increase was mainly due to an increase of RMB5.7 million in bad debt provision of receivables and an increase of RMB2.4 million in expenses for employees, which were partially offset by a decrease of RMB0.5 million in rental expenses.
Service development expenses were RMB11.9 million (US$1.7 million) for the fourth quarter of 2019, representing a decrease of RMB4.2 million or 26.1% from RMB16.1 million for the fourth quarter of 2018, and a slight increase of RMB0.8 million or 7.2% from RMB11.1 million for the third quarter of 2019. The year-over-year decrease was mainly due to a decrease of RMB2.2 million in share-based compensation expenses associated with share options granted to the Company's employees, a decrease of RMB1.2 million in expenses for employees and a decrease of RMB0.6 million in rental expenses. The sequential increase was mainly due to an increase of RMB1.7 million in expenses for employees, which was partially offset by a decrease of RMB0.6 million in rental expenses.
Impairments of Goodwill and Acquired Intangible assets
The impairments of goodwill and acquired intangible assets were related to the Company's acquisition of TMG, which were triggered by the TMG's temporary suspension of operations in Sweden.
Impairment of goodwill was RMB41.6 million (US$6.0 million) for the fourth quarter of 2019. Impairment of goodwill was RMB30.9 million for the third quarter of 2019 and there was no impairment of goodwill for the fourth quarter of 2018.
Impairment of acquired intangible assets was RMB181.8 million (US$26.1 million) for the fourth quarter of 2019. There was no impairment of acquired intangible assets for the fourth quarter of 2018 and for the third quarter of 2019.
Operating Loss
Operating loss was RMB298.7 million (US$42.9 million) for the fourth quarter of 2019, compared with operating loss of RMB95.3 million for the fourth quarter of 2018, and operating loss of RMB98.4 million for the third quarter of 2019. The year-over-year increase was mainly due to an impairment provision of RMB181.8 million provided for acquired intangible assets and an impairment provision of RMB41.6 million provided for goodwill during the fourth quarter of 2019, while no such impairment provision was recorded for the fourth quarter of 2018. The sequential increase was mainly due to an impairment provision of RMB181.8 million provided for acquired intangible assets and an impairment provision of RMB41.6 million provided for goodwill during the fourth quarter of 2019, compared with an impairment provision of RMB30.9 million provided for goodwill during the third quarter of 2019.
Non-GAAP operating loss was RMB60.1 million (US$8.6 million) for the fourth quarter of 2019, compared with non-GAAP operating loss of RMB70.1 million for the fourth quarter of 2018, and non-GAAP operating loss of RMB52.3 million for the third quarter of 2019.
Net Loss Attributable to 500.com
Net loss attributable to 500.com was RMB307.9 million (US$44.2 million) for the fourth quarter of 2019, compared with net loss attributable to 500.com of RMB247.7 million for the fourth quarter of 2018, and net loss attributable to 500.com of RMB95.8 million for the third quarter of 2019. The year-over-year increase was mainly due to an impairment provision of RMB181.8 million provided for acquired intangible assets, an impairment provision of RMB41.6 million provided for goodwill and an impairment provision of RMB12.4 million provided for long-term investment during the fourth quarter of 2019, compared with an impairment provision of RMB149.9 million provided for long-term investment during the fourth quarter of 2018, a decrease of RMB18.6 million in revenue, which was partially offset by a decrease in operating expenses of RMB39.5 million. The sequential increase was mainly due to an impairment provision of RMB181.8 million provided for acquired intangible assets and an impairment provision of RMB41.6 million provided for goodwill during the fourth quarter of 2019, compared with an impairment provision of RMB30.9 million provided for goodwill during the third quarter of 2019, and an impairment provision of RMB12.4 million provided for long-term investment during the fourth quarter of 2019, while no such impairment provision provided for the third quarter of 2019.
Non-GAAP net loss attributable to 500.com was RMB64.5 million (US$9.3 million) for the fourth quarter of 2019, compared with non-GAAP net loss attributable to 500.com of RMB93.2 million for the fourth quarter of 2018, and non-GAAP net loss attributable to 500.com of RMB49.7 million for the third quarter of 2019.
Full Year 2019 Financial Results for Continuing Operations
Net revenues for full year 2019 were RMB39.7 million (US$5.7 million), representing a decrease of RMB 86.4 million or 68.5% from RMB126.1 million for full year 2018. The year-over-year decrease was mainly attributable to TMG's website migration in connection with the conversion of its Swedish license at the beginning of 2019 which required users to re-register their accounts and resulted in a decrease of users, and the ceased operation of sports information services in China in March 2019.
Operating loss for full year 2019 was RMB634.4 million (US$91.1 million), including the impairment of acquired intangible assets of RMB181.8 million and the impairment of goodwill of RMB129.8 million, representing an increase of RMB289.9 million or 84.2% from RMB344.5 million for full year 2018.
Non-GAAP operating loss for full year 2019 was RMB243.6 million (US$35.0 million), representing an increase of RMB7.7 million or 3.3% from RMB235.9 million for full year 2018.
Net loss attributable to 500.com for full year 2019 was RMB636.4 million (US$91.4 million), representing an increase of RMB173.5 million or 37.5% from RMB462.9 million for full year 2018.
Non-GAAP net loss attributable to 500.com for full year 2019 was RMB240.8 million (US$34.6 million), representing an increase of RMB15.8 million or 7.0% from RMB225.0 million for full year 2018.
Cash and Cash Equivalents, Restricted Cash, Time Deposits and Short-term Investments
As of December 31, 2019, the Company had cash and cash equivalents of RMB361.5 million (US$51.9 million), restricted cash[2] of RMB4.3 million (US$0.6 million) and time deposits[3] of RMB23.8 million (US$3.4 million), compared with cash and cash equivalents of RMB242.7 million, restricted cash of RMB4.2 million and time deposits of RMB165.4 million as of September 30, 2019.
[2] Restricted cash represents: (i) government grants received but pending final clearance; and (ii) deposits in |
[3] Time deposits represent deposits in commercial banks with original maturities of greater than three months but less than a year. |
Prepayments and Other Current Assets
As of December 31, 2019, the balance of prepayment and other current assets was RMB38.7 million (US$5.6 million), compared with RMB53.5 million as of September 30, 2019. The balance as of December 31, 2019 mainly included: (i) the current portion of deferred expenses of RMB2.7 million (US$0.4 million); (ii) receivables from third party payment providers of RMB5.2 million (US$0.7 million); (iii) deposit receivables of RMB1.2 million (US$0.2 million); (iv) receivables of consideration from disposal of subsidiaries of RMB4.3 million (US$0.6 million); (v) deductible value added input tax of RMB11.6 million (US$1.7 million); and (vi) other receivables of RMB13.7 million (US$2.0 million).
Business Outlook
The Company does not expect to issue any earnings forecast until it receives clear instructions as to the resumption date of online sports lottery sales from the Ministry of Finance.
Currency Convenience Translation
This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB6.9618 to US$1.00, as set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2019, and all translations from Renminbi to Euros were made at the exchange rate of RMB7.7181 to EUR1.00, which was the average of the month-end exchange rates as set forth in the statistical release of State Administration of Foreign Exchange at the end of each month in 2019.
About 500.com Limited
500.com Limited (NYSE: WBAI) is a leading online sports lottery service provider in China. The Company offers a comprehensive and integrated suite of online lottery services, information, user tools and virtual community venues to its users. 500.com was among the first companies to provide online lottery services in China, and is one of two entities that have been approved by the Ministry of Finance to provide online lottery sales services on behalf of the China Sports Lottery Administration Center, which is the government authority that is in charge of the issuance and sale of sports lottery products in China.
Safe Harbor Statements
This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.
About Non-GAAP Financial Measures
To supplement the Company's financial results presented in accordance with U.S. GAAP, the Company uses non-GAAP financial measures, which are adjusted from results based on U.S. GAAP to exclude share-based compensation expenses in the Company's consolidated affiliated entities. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in table at the end of this release, which provide more details on the non-GAAP financial measures.
Non-GAAP financial information is provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the historical and current financial performance of the Company's continuing operations and prospects for the future. Non-GAAP financial information should not be considered a substitute for or superior to U.S. GAAP results. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.
For more information, please contact:
500.com Limited
ir@500wan.com
Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com
500.com Limited | ||||
December 31, | December 31, | December 31, | ||
RMB | RMB | US$ | ||
Audited | Unaudited | Unaudited | ||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | 435,133 | 361,520 | 51,929 | |
Restricted cash | 1,254 | 4,276 | 614 | |
Time deposits | - | 23,849 | 3,426 | |
Short-term investments | 100,000 | - | - | |
Amounts due from related parties | - | 10,401 | 1,494 | |
Prepayments and other current assets | 65,198 | 38,671 | 5,555 | |
Total current assets | 601,585 | 438,717 | 63,018 | |
Non-current assets: | ||||
Property and equipment, net | 97,195 | 64,112 | 9,209 | |
Intangible assets, net | 214,962 | 4,505 | 647 | |
Deposits | 5,152 | 5,381 | 773 | |
Long-term investments | 194,375 | 163,546 | 23,492 | |
Right-of-use assets | 36,607 | 5,258 | ||
Other non-current assets | 3,563 | 1,894 | 272 | |
Goodwill | 129,752 | - | - | |
Total non-current assets | 644,999 | 276,045 | 39,651 | |
TOTAL ASSETS | 1,246,584 | 714,762 | 102,669 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accrued payroll and welfare payable | 9,779 | 6,879 | 988 | |
Accrued expenses and other current liabilities | 88,149 | 51,398 | 7,383 | |
Income tax payable | 1,766 | 2,213 | 318 | |
Operating lease liabilities - current | - | 16,672 | 2,395 | |
Total current liabilities | 99,694 | 77,162 | 11,084 | |
Non-current liabilities: | ||||
Long-term payables | 4,196 | 2,965 | 426 | |
Deferred tax liabilities | 7,744 | 59 | 8 | |
Operating lease liabilities - non-current | - | 31,675 | 4,550 | |
Total non-current liabilities | 11,940 | 34,699 | 4,984 | |
TOTAL LIABILITIES | 111,634 | 111,861 | 16,068 | |
Redeemable noncontrolling interest | 29,388 | 29,388 | 4,221 | |
Shareholders' Equity: | ||||
Class A ordinary shares, par value US$0.00005 | 121 | 145 | 21 | |
Class B ordinary shares, par value US$0.00005 | 28 | 6 | 1 | |
Additional paid-in capital | 2,431,924 | 2,532,754 | 363,807 | |
Treasury shares | (143,780) | (143,780) | (20,653) | |
Accumulated deficit | (1,309,424) | (1,945,814) | (279,499) | |
Accumulated other comprehensive income | 137,736 | 144,263 | 20,722 | |
Total 500.com Limited shareholders' equity | 1,116,605 | 587,574 | 84,399 | |
Noncontrolling interests | (11,043) | (14,061) | (2,019) | |
Total shareholders' equity | 1,105,562 | 573,513 | 82,380 | |
TOTAL LIABILITIES, NONCONTROLLING | 1,246,584 | 714,762 | 102,669 | |
500.com Limited | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||
Unaudited | Unaudited | Unaudited | Unaudited | Audited | Unaudited | Unaudited | ||||||
Net Revenues | 27,160 | 9,763 | 8,585 | 1,233 | 126,089 | 39,688 | 5,701 | |||||
Operating costs and expenses: | ||||||||||||
Cost of services | (20,590) | (16,096) | (12,214) | (1,754) | (80,017) | (59,410) | (8,534) | |||||
Sales and marketing expenses | (22,846) | (8,980) | (9,133) | (1,312) | (92,465) |
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