500.com growth not matching the market

500china500.com Ltd, the NYSE-listed online sports-lottery operator in China, has reported a 44% drop in operating profit and warning that ticket purchases may decline further this quarter.

Founder, Chairman and Chief Executive Officer Man San Law commented: “We finished the year on a strong note with net revenues increasing 52.1% year-over-year. Total purchase amount during the quarter increased 63.7% from the same period last year to US$283.3 million as non-GAAP net income grew significantly, increasing 98.5% to US$8.3 million. We continue to invest in the marketing of our mobile app as purchases made through mobile channels rapidly approaches half of all purchases. We expect to see this trend continue as we roll out new functions and games to enhance the overall user experience.”

While active users increased 10% to almost 1 million last quarter, the figure compared with a 19 percent increase in China’s lottery ticket sales in December.

Nick Ning, an analyst at 86Research Ltd. based in Shanghai, told Bloomberg: “500.com’s sales are not growing as fast as the market. Its first-quarter guidance is also weak. It has lost market share to competitors like Alibaba’s lottery site, while NetEase is getting more aggressive.”

 

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