XD Inc. 2019 Annual Report

Key insights

6 takeaways

01
XD Inc. achieved a successful IPO in December 2019, facilitating a strategic shift toward a synergistic model that integrates in-house game development with the TapTap distribution platform.See it on page 78
02
Total revenue grew to RMB 2.84 billion in 2019, up from RMB 1.89 billion in the previous year, driven largely by a 55.9% increase in information services revenue.See it on page 16
03
Annual profit rose by 45.6% to RMB 513.4 million, despite increased operational expenditures in research, development, and marketing.See it on page 18
04
The company maintains a free-to-distribute business model for TapTap, prioritizing long-term ecosystem growth and developer support over immediate commission-based revenue.See it on page 7
05
To navigate Chinese regulatory requirements, the company implemented a corporate reorganization involving an offshore holding structure and contractual arrangements to control restricted domestic entities.See it on page 79
06
Governance and compliance efforts were formalized post-IPO, including the implementation of anti-addiction systems for minors and the establishment of specialized board committees.See it on page 59

Summary

XD Inc.’s 2019 annual report details a pivotal year of growth and structural transformation, underscored by the company’s successful December 2019 initial public offering. The organization’s primary strategic objective centers on a synergistic model that integrates in-house game development and publishing with the TapTap platform. By maintaining a free-to-distribute approach for TapTap, the company prioritizes long-term ecosystem value and developer support over immediate commission-based revenue, aiming to drive user growth and enhance the platform's competitive position in both domestic and international markets.

Financial performance in 2019 was robust, with total revenue rising to RMB 2.84 billion, a significant increase from RMB 1.89 billion in the previous year. This growth was fueled by the strong performance of key titles and a 55.9% surge in information services revenue. Despite increased investment in research, development, and marketing, the company achieved a 45.6% rise in annual profit to RMB 513.4 million. The company’s liquidity position remains strong, bolstered by IPO proceeds and a conservative approach to financial risk management, including rigorous impairment testing and the maintenance of substantial cash reserves.

Operationally, the company navigated complex regulatory environments through a corporate reorganization that established an offshore holding structure and utilized contractual arrangements to maintain control over restricted entities in the People's Republic of China. Governance frameworks were formalized following the public listing, with the establishment of specialized board committees and a commitment to ESG standards, including the implementation of anti-addiction systems for minors and sustainable office initiatives. As of year-end 2019, the company held a significant portfolio of intellectual property and maintained a stable outlook, reporting no material litigation and confirming its status as a going concern despite the emerging global challenges of the COVID-19 pandemic.