XD Inc. 2022 Annual Report

Key insights

6 takeaways

01
XD Inc. generated RMB 3.43 billion in total revenue in 2022, a 26.9% year-on-year increase driven by the game Sausage Man and the TapTap platform.See it on page 11
02
The company narrowed its net loss to RMB 574 million, representing a 37.4% improvement compared to the previous fiscal year.See it on page 14
03
Management reduced adjusted EBITDA losses by 56.7% through workforce optimizations, the termination of non-viable projects, and a shift toward fiscal discipline.See it on page 6
04
TapTap’s information services platform experienced significant growth, achieving a 31.3% increase in average monthly active users.See it on page 10
05
As of December 31, 2022, the company maintained a stable liquidity position with RMB 3.1 billion in cash and cash equivalents.See it on page 16
06
The company improved its gearing ratio to 52% while shifting its strategic focus toward AI-generated content and the launch of new titles.See it on page 9

Summary

XD Inc.’s 2022 annual report details a transitional fiscal year characterized by record-high revenue alongside a strategic pivot toward operational efficiency and fiscal discipline. The company achieved total revenue of RMB 3.43 billion, representing a 26.9% year-on-year increase, primarily fueled by the performance of the game Sausage Man and the continued expansion of the TapTap information services platform, which saw a 31.3% growth in average monthly active users. Despite these gains, the company recorded a net loss of RMB 574 million, though this reflects a 37.4% improvement over the previous year’s losses.

The company’s primary thesis centers on balancing aggressive growth in its core gaming and platform segments with a more pragmatic approach to research and development. In response to underperforming titles and development delays, management implemented workforce optimizations and terminated non-viable projects to reduce administrative expenses and adjusted EBITDA losses by 56.7%. As of December 31, 2022, the group maintained a stable liquidity position with RMB 3.1 billion in cash and cash equivalents, supported by proceeds from previous capital raises earmarked for ongoing R&D and strategic investments.

Operationally, the company continues to navigate the complexities of the Chinese regulatory environment through established contractual arrangements that allow for the consolidation of its PRC-affiliated entities. Corporate governance remains robust, with a focus on board diversity, rigorous internal risk management, and comprehensive ESG initiatives, including data privacy compliance and environmental sustainability efforts. Looking forward, the company is prioritizing the integration of AI-generated content and the launch of new titles to drive long-term value, supported by a disciplined capital management strategy that improved its gearing ratio to 52% during the reporting period.