500.com Ltd. (WBAI) Misses Q1 EPS Views; CEO Man San Law Resigns

500.com Ltd. (NYSE: WBAI) reported Q1 EPS of ($0.06), $0.31 worse than the analyst estimate of $0.25. Revenue for the quarter came in at $15.9 million versus the consensus estimate of $22.75 million.

Active Users

Active users decreased by 12.9% from approximately 984,000 in the fourth quarter of 2014 to approximately 857,000 during the first quarter of 2015, primarily due to the adverse impact caused by the temporary suspension.

New Active Users

The Company had a total of 485,000 new active users during the quarter, a decrease of 42.5% from 844,000 new active users during the fourth quarter of 2014, primarily due to the adverse impact of the temporary suspension. New active users accounted for 12.4% of the Company’s total purchase amount during the first quarter of 2015, a decrease from 52.4% during the fourth quarter of 2014.

Temporary Suspension of Online Lottery Sales

Since March 2015, all provincial sports lottery administration centers to which the Company provides sports lottery sales services have temporarily 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, or the Self-Inspection Notice, which was jointly promulgated by the Ministry of Finance, or the MOF, the Ministry of Civil Affairs and the General Administration of Sports of the People’s Republic of China on January 15, 2015.

On February 24, 2015, the Company was informed by certain provincial sports lottery administration centers that as part of their respective self-inspection processes, such provincial sports lottery administration centers planned to temporarily suspend accepting online purchase orders for lottery products starting from February 25, 2015. On March 2, 2015, the Company was further informed by the remaining provincial sports lottery administration centers to which it provides sports lottery sales services that such provincial sports lottery administration centers also planned to temporarily suspend accepting online purchase orders for lottery products, in response to the Self-inspection Notice.

As a result of the provincial sport lottery administration centers’ decision to temporarily suspend accepting online lottery orders, or the temporary suspension, 500.com’s transaction volume decreased significantly. The Company recorded operating loss for the first quarter of 2015 and is currently not generating any revenue due to the temporary suspension.

Board and Management Changes

On May 15, 2015, the board of directors, or the Board, approved the following changes in the Board and the management of the Company, with immediate effect:

Mr. Zhengming Pan, the president of the Company, was appointed as the chief executive officer of the Company. Simultaneously, Mr. Man San Law resigned from his role as the chief executive officer and remains the Chairman of the Company.

Mr. Qi Li resigned as a director of the Company for personal reasons and Mr. Zhengming Pan was appointed as a director to fill the vacancy. Mr. Man San Law was appointed as the chairman of the compensation committee of the Board and Mr. Zhengming Pan was appointed as a member of the strategy committee of the Board.

Outlook:

Due to the temporary suspension of online lottery sales, the Company expects the total purchase amount to be zero during the second quarter of 2015. There is no clear indication how long the temporary suspension will last. These estimates reflect the Company’s current and preliminary view, which is subject to possible material changes.

For earnings history and earnings-related data on 500.com Ltd. (WBAI) click here.

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