XD Inc. Annual Results Announcement 2020

Key insights

6 takeaways

01
XD Inc. prioritized long-term platform expansion over immediate profitability in 2020, resulting in a 97.4% decline in profit attributable to equity holders to RMB 9.1 million.See it on page 16
02
The company’s aggressive investment strategy led to a 107% surge in research and development expenditures and a 23.4% increase in revenue costs.See it on page 10
03
TapTap platform engagement grew significantly, with domestic monthly active users (MAUs) rising 43.7% to 25.7 million and overseas MAUs increasing by 330.9%.See it on page 5
04
Annual revenue remained stable at RMB 2.85 billion, though gross margins were compressed to approximately 54% due to the focus on infrastructure and ecosystem development.See it on page 9
05
The firm maintained a robust liquidity position with RMB 2.3 billion in cash and cash equivalents, supported by successful share placements to fund future strategic development.See it on page 14
06
XD Inc. is transitioning its business model away from reliance on mature online games toward a diversified structure centered on developer services and global market reach.See it on page 16

Summary

XD Inc. demonstrated a strategic pivot toward long-term platform expansion and research investment throughout 2020, prioritizing user acquisition and infrastructure development over immediate profitability. While annual revenues remained stable at RMB 2.85 billion, profit attributable to equity holders experienced a significant decline of 97.4% to RMB 9.1 million. This contraction was primarily driven by a 107% surge in research and development expenditures and a 23.4% increase in revenue costs, reflecting the company’s aggressive commitment to scaling its game portfolio and enhancing the TapTap ecosystem.

The company’s operational focus yielded substantial growth in user engagement, particularly within the TapTap platform. Domestic monthly active users (MAUs) rose by 43.7% to 25.7 million, while the overseas version of the platform saw a dramatic 330.9% increase in MAUs. This expansion, supported by a corporate structure that integrates game development with information services, underscores a transition away from reliance on mature online games toward a more diversified model centered on developer services and global reach. Despite the compression of gross margins to approximately 54%, the firm maintained a robust liquidity position, holding RMB 2.3 billion in cash and cash equivalents following successful share placements.

Operating under a unified leadership structure led by Chairman and CEO Huang Yimeng, the organization continues to leverage its PRC-based high-tech enterprise status to optimize tax efficiency while reinvesting earnings into future growth. With a clear mandate to utilize capital from global offerings for strategic development over the coming three years, the company remains positioned to balance its current financial volatility against the objective of establishing a dominant, scalable presence in both domestic and international gaming markets.