Company Presentation Disclaimers This document is confidential and - - PowerPoint PPT Presentation
Company Presentation Disclaimers This document is confidential and - - PowerPoint PPT Presentation
Company Presentation Disclaimers This document is confidential and is intended only for the use of the person(s) to whom it is presented. It may not be reproduced (in whole or in part) nor may its contents be divulged to any other person. No
Disclaimers
This document is confidential and is intended only for the use of the person(s) to whom it is presented. It may not be reproduced (in whole or in part) nor may its contents be divulged to any other person. No part of this document may be retained or taken away following the presentation to which this document relates. This document does not constitute an offer to sell or a solicitation of an offer to buy any securities. It is an outline of matters for discussion only. No part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Specifically, this document does not constitute a “prospectus” within the meaning of the U.S. Securities Act of 1933, as amended. 500.com Limited (the “Company”) has filed a registration statement (including a prospectus) (File No. 333-191844) with the U.S. Securities and Exchange Commission (the “SEC”) for the securities to be
- ffered in the United States, but the registration statement has not yet become effective. This presentation does not contain all relevant information relating to the Company or its securities, particularly with
respect to the risks and special considerations involved with an investment in the securities of the Company, and is qualified in its entirety by reference to the detailed information appearing in the prospectus included in the registration statement filed by the Company with the SEC. Any offering of securities to be made in the United States and any decision to purchase securities of the Company in the United States or anywhere else should be made solely on the basis of the information contained in the prospectus included in the registration statement filed by the Company with the SEC. Before making an investment decision, you should read the prospectus in that registration statement and other documents that the Company has filed with the SEC for more complete information about the Company and its securities. You may access these documents for free by visiting EDGAR on the SEC website at: http://www.sec.gov. The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-503-4611. You may not rely upon this document in evaluating the merits of participating in any transaction referred to herein. This document contains selected information and does not purport to be all-inclusive or to contain all of the information that may be relevant to your participation in any such transaction. This document does not constitute and should not be interpreted as either a recommendation or advice, including investment, financial, legal, tax or accounting advice. By attending this presentation, you acknowledge that you will be solely responsible for your own assessment of the merits of participating in any such transaction and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company. Future results are impossible to predict. Certain statements in this presentation, and other statements that the Company may make, may contain forward-looking statements with respect to the Company’s future financial or business performance, or opinions, expectations, beliefs, intentions, estimates or strategies regarding the future, which may not be realized. These statements may be identified by the use of words like “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “should,” “seek,” and similar expressions. The Company cautions that forward-looking statements reflect views and assumptions as of the date of this document and are subject to numerous risks and uncertainties, many of which are beyond the Company’s control and subject to change over time. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. Given these risks, uncertainties, assumptions and other factors, you are cautioned not to place undue reliance on these forward-looking statements. The Company and its affiliates, advisers, representatives and underwriters have no obligation to and do not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following presentation has been prepared by the Company and has not been independently verified. No representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the accuracy, fairness, completeness, correctness or reasonableness of the information, sources or opinions presented or contained in this document. Neither the Company nor any of its affiliates, advisers, representatives or underwriters, or any of their respective directors, officers, employees or agents, accepts any responsibility or liability whatsoever (in negligence or otherwise) for any damage or loss howsoever arising from any information presented or contained in this document, any omission, inadequacy or inaccuracy in this document, or otherwise arising in connection with this
- presentation. The information presented or contained in this document is subject to change without notice and its accuracy is not guaranteed.
This presentation speaks as of the date hereof. Neither the delivery of this presentation nor any further discussions of the Company or any of its affiliates, shareholders, directors, employees, agents or advisors with any of the recipients of this document shall, under any circumstances, create any implication that the affairs of the Company have not changed since that date. 1
Company Overview
Peer Comparisons Industry Overview
Key Competitive Strength
Financials
Growth Strategies
Our business model
2
Highly Efficient Business Model
Prize Collection Service fee Purchase
100% purchase price 100% of prize Service fee 100% purchase price 100% of prize
Operation 100% online
No logistics / No inventory No principal risk No counterparty risk
Lottery games offered on our platform
* purchase amount in 1H2014 Source: Company 3
Bet on the outcome or scores of one
- r a combination of sports matches
Basketball Soccer
Choose N numbers out of M numbers, results announced every 10 or 15 minutes Select N numbers out
- f M numbers, results
announced daily or every 3 days
Lotto Games High Frequency Games
Sports Match Games Number Based Games
87% of total purchase amount* 13% of total purchase amount* … …
Peer Comparisons
Company Overview Key Competitive Strength
Growth Strategies
Financials
Industry Overview
China Lottery Market Overview
Regulatory framework and value chain
4 Source: iResearch
100
Ministry of Finance (Regulator)
50 – 69
Prize pool for lottery buyers
18 – 35
Fund for public interests Administration Cost Sales Commission Promotion Cost Ministry of Civil Affairs (Issuer) General Administration of Sports (Issuer) China Sports Lottery Administration Center China Welfare Lottery Issuance and Administration Center Lotto Instant Sports Match Instant Lotto
13 – 15
Distribution Cost Social Welfare Lottery Sports Lottery Provincial welfare lottery issuance and administration centers Provincial sports lottery administration centers
Regulatory Framework Lottery Revenue Sharing Scheme
27.2 50.7 73.6 2010 2013 2015E
China’s Total Lottery Market China's Sports Lottery Market China's Online Sports Lottery Market
5
0.4 1.5 3.2 2010 2013E 2015E
(US$ bn) (US$ bn) (US$ bn)
Fast growing market
Source: iResearch
3.3 % 6.9 % 10.1% Penetration %
11.4 21.9 31.3 2010 2013 2015E
176 ... 513 811 837 869 1,064 2,377 3,517 4,324 5,458 5,646 2001 … 2005 2006 2007 2008 2009 2010 2011 2012 2013 7M2014 Sports betting market size
6
Huge market potentials Growth trend resilient to economic cycles
2001 2005 2009 2014
… … …
- Oct 2001, launch of soccer
lottery, payout ratio at 60%
- Sep 2005, soccer lottery
payout ratio at 65%
- Sep 2005, launch of Beijing
Single Match Lottery
- May 2009, launch of Soccer
Match Lottery, payout ratio at 69%
- Nov 2009, launch of
Basketball Match Lottery
- Oct 2014, launch of Single
Match Fixed Odds, payout ratio at 73%
“It is estimated the illegal betting market size to be approximately RMB600 billion every year…” 2012, Sina News “The total amount that is illegally wagered in China is estimated to be as high as US$93 billion in 2012” 2013, Global Betting and Gaming Consultants “It is estimated the ratio of legal gambling and illegal gambling is at 1:10, then China’s illegal gambling amount is at hundreds of billions
- f dollars…”
2014, Xinhua news
(US$ millions)
Company Overview
Industry Overview Financials
Peer Comparisons
Growth Strategies
Key Competitive Strength
Leading online sports lottery platform in China
Market leader with government approval
7
* Online sports lottery only, in terms of purchase amount in the first half of 2013 Source: iResearch
1H 2013
The only MOF-approved privately owned online lottery sales service provider with an operational track record
Largest Market Share in China*
MOF- Approved Online Lottery Service Provider
How we obtain users…
8
Direct generated sales channel*
91% of total purchase amount**
3rd party sales channel
9% of total purchase amount* World Cup Betting Contest
67% participants are new users 1.46 million participants in 25 matches Average ARPU is 3.9x of overall ARPU of the same period and accounts for 60.3% of overall purchase amount
Brought in 14 million newly registered users Sociable & entertaining campaign
* Including search engine, SEO and SEM ** Purchase amount as of September, 30, 2014
Share Lotteries with Friends Advertisements
…
9
Global sports match information Comprehensive lottery information 74
Lottery Products
973
Odds Sources
- 61 provincial
lottery products
13 national
lottery products Matches from 60 countries
450,000+ soccer and basketball
matches
How we retain our users… Comprehensive lottery information services
10
How we retain our users… Reliable and fast service
Peers are pure companies Internet
is a true company
Internet lottery
0.74 2.16 3.23 1Q2014 2Q2014 3Q2014 127.2 22.1 20.7 221.6 79.5 36.3
191.2 140.5 34.0
0.6 0.24 0.66 1.07 0.71 1.48 1.01 0.74 2.49 0.82 1.76 2.41 0.33 0.77 1.09 1.15 2.53 3.50 1Q2014 2Q2014 3Q2014
Third party channels Direct active users
Active Users Active New Users
11 (mn)
Large and active user base
(mn)
1Q2014 2Q2014 3Q2014 3Q2014 3Q2014 1Q2014 2Q2014 1Q2014 2Q2014
(mn)
Active Users by Platforms
- No. of users
PC Mobile App Mobile website Total purchase amount PC Mobile App Mobile website
(US$ mn)
ARPU 212.0 207.1 189.3 92.1 112.0 189.9 31.4 24.5 13.7 1Q2014 2Q2014 3Q2014 3Q2014 3Q2014 1Q2014 2Q2014 1Q2014 2Q2014
Entrepreneurship and Strategic Vision
LAW Man San Founder, Chairman & CEO
- Founded Shenzhen E-Sun Network Co., Ltd. in 2001
- Pioneer in online lottery service industry in China for 10+ years
- Executive MBA degree from Cheung Kong Graduate School of Business, Bachelor’s degree from
Wuhan University
Experienced Senior Management Team
PAN Zhengming President
- Joined in 2011
- Over 8 years of experience in finance and legal industries
- JD degree from University of Columbia Law School
YU Min CFO
- Joined in 2014
- Over 8 years of experience in finance
- Bachelor’s degree from University of Melbourne
ZHENG Lei COO
- Joined in 2009
- 10 years of experience in the IT industry
- Bachelor’s degree from Wuhan University
TIAN Zhaofu CTO
- Joined in 2012
- Over 10 years of experience in information technology industry
- MBA degree from Hong Kong University of Science and Technology
YU, Wensheng Director of International Business
- Joined in 2013
- Over 10 years of experience in sports and gaming industry
- Bachelor’s degree from University of Westminster in UK
12
Experienced and dedicated management team
Financials
Industry Overview
Key Competitive Strength Growth Strategies
Peer Comparisons
Company Overview
38.1 39.5 37.4 34.9 63.3 58.0 57.4 54.3 100.3 42.4 27.7 36.0 72.3 74.5 70.3 78.6 143.7 139.2 142.3 13.1 31.8 45.1 52.8 16.3 36.0 47.7 77.0 17.9 18.1 12.5 17.7 15.7 39.6 49.9 98.4 26.0 198.2 223.4 51.2 71.3 82.5 87.7 79.6 94.0 105.1 131.3 118.2 60.5 40.2 53.7 88.0 114.1 120.2 177 169.7 337.4 365.7 1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 New customers
Quarterly Purchase Amount
Financials
Sustainable high growth
13 (US$ mn)
* Between March and November 2012, we voluntarily scaled down our business and migrated our users ** Users who made purchases in previous years
Quarterly Revenue Annual Revenues
(US$ mn) (US$ mn)
27.1 40.2 30.2 54.9 25.7 38 28 42.9 2010 2011 2012 2013 Service Fee (Gross Revenue) Net Revenue
Voluntary suspension*
**
18.5 35.7 36.8 14.5 25.2 30.6 1Q2014 2Q2014 3Q2014 Service Fee (Gross Revenue) Net Revenue
3.4 3.1 3.2 4.2 4.4 1.0 (0.8) 0.3 0.2 1.3 2.1 4.3 5.2 13.4 13.0 44.70% 34.90% 33.60% 35.20% 37.10% 17.40% (22.50)% 4.80% 3.70% 16.30% 19.60% 27.10% 36.10% 53.28% 42.48% 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 6.3 2.2 0.7 17.5 4.5 12.2 6.5 24.30% 5.80% 2.50% 40.90% 31.59% 48.29% 21.24% 2010 2011 2012 2013 1Q2014 2Q2014 3Q2014 GAAP net income GAAP net margin 22.1 34.0 25.0 38.3 13.4 22.9 27.9 86.00% 89.50% 89.20% 89.30% 92.85% 90.95% 91.20% 2010 2011 2012 2013 1Q2014 2Q2014 3Q2014 Gross profit Gross margin
Quarterly Non-GAAP Net Income***
* Gross profit = Net revenue – Cost of service ** Between March and November 2012, we voluntarily scaled down our business and migrated our users *** Adjustments of share-based compensation
Financials
Stable gross margin and growing net margin
Stable Gross Margin*
(US$ in mn) (US$ in mn) (US$ in mn)
GAAP Net Income
14
Voluntary suspension**
Growth Strategies
Key Competitive Strength
Financials
Peer Comparisons
Company Overview
Industry Overview
15
Technology
Enhance infrastructure and security system to ensure reliability and better user satisfaction
Lottery purchase services
Further enhance specialized and sophisticated services
Mobile services
Focus on mobile services development
Strategic partnerships
Pursue strategic partnerships and acquisitions
Strengthen brand name
Growth strategies
Peer Comparisons
Financials
Growth Strategies Company Overview
Industry Overview
Key Competitive Strength
Peer Comparison – Q3 results
Gross Merchandise Volume (GMV) Non-GAAP Net Profit Market Cap 2014 Non-GAAP Net Profit Growth (US$mn) (US$mn) (US$mn) Q1 QoQ Q1 YoY Q2 QoQ Q2 YoY Q3 QoQ Q3 YoY 365.7 13.0 842 22% 2,129% 157% 476% (4.3%) 485.3% 273.0 21.0 2,620 (25%) 133% 50% 68% 18.0% 87.4% 134%* 62%* 32%* 882.6 46.3 12,870 31% 318% 14% 264% 7.7% 206.8% 41%* 28%* 7%*
16
* 500.com’s key metrics as a percentage of the comparables’ Source: Company fillings and Bloomberg as of 23 Nov 2014