XD Inc. Annual Results Announcement for the Year Ended 31 December 2019

Key insights

6 takeaways

01
XD Inc. reported a 50.4% year-over-year revenue increase to RMB 2.84 billion for the 2019 fiscal year.See it on page 6
02
Adjusted profit rose 61.1% to RMB 572 million, while net profit grew 45.6% to RMB 513.4 million.See it on page 15
03
The TapTap platform reached 17.9 million average monthly active users by year-end 2019, representing a 19.6% increase.See it on page 7
04
The company’s game operations segment maintained a 57% gross margin throughout the 2019 fiscal year.See it on page 23
05
An initial public offering in December 2019 generated net proceeds of approximately HK$723.7 million to fund future development and strategic expansion.See it on page 33
06
Chairman and CEO roles remain consolidated under Mr. Huang Yimeng to ensure strategic continuity during the company's transition to a public entity.See it on page 34

Summary

XD Inc. achieved substantial financial expansion during the 2019 fiscal year, characterized by a 50.4% year-over-year revenue increase to RMB 2.84 billion. This growth was underpinned by a robust performance in both the game operations and information services segments, with the former maintaining a strong 57% gross margin. Profitability metrics followed a similar upward trajectory, as adjusted profit climbed 61.1% to RMB 572 million, while net profit for the year rose 45.6% to RMB 513.4 million. These gains were realized despite significant capital allocation toward research and development, administrative overhead, and marketing initiatives.

The company’s strategic focus centers on the synergy between its internal game development pipeline and the TapTap platform. TapTap experienced a 19.6% increase in average monthly active users, reaching 17.9 million by year-end, which served as a critical driver for the company’s information services revenue. This ecosystem approach, combined with the successful launch of new titles, solidified the company’s market position. Furthermore, the December 2019 initial public offering provided a vital liquidity injection, raising approximately HK$723.7 million in net proceeds intended to fuel future game development, platform expansion, and strategic investments.

Operationally, the company navigated the transition to a public entity while maintaining a stable financial position. Although the leadership structure deviates from standard corporate governance recommendations by consolidating the Chairman and CEO roles under Mr. Huang Yimeng, the board maintains this arrangement to ensure strategic continuity. Looking ahead, the company remains committed to its long-term growth strategy, which includes permanent reinvestment of earnings from its PRC subsidiaries and ongoing adaptation to the evolving global gaming landscape, including operational adjustments necessitated by the onset of the COVID-19 pandemic.