XD Inc. Annual Results Announcement 2021

Key insights

6 takeaways

01
XD Inc. shifted from profitability to a net loss of RMB 917.3 million in 2021, driven by a 5.1% revenue decline to RMB 2.7 billion as core game titles matured.See it on page 12
02
The TapTap platform saw significant growth, with domestic monthly active users rising 22.8% to 31.6 million and international users surging 154.3% to 12.2 million.See it on page 5
03
The company aggressively prioritized long-term growth, increasing research and development spending by 88.9% and marketing expenditures by 23.2%.See it on page 11
04
To fund its development pipeline, the company bolstered liquidity through convertible bonds and share placements, ending the year with RMB 3.96 billion in cash and investments.See it on page 36
05
Total liabilities increased to RMB 2.66 billion due to debt financing, and the company does not plan to issue a dividend for the 2021 fiscal year.See it on page 18
06
Management expects to fully exhaust its current capital reserves by the end of 2023 to sustain ongoing game development and marketing initiatives.See it on page 2

Summary

XD Inc. experienced a challenging fiscal year in 2021, characterized by a transition from profitability to a net loss of RMB 917.3 million. This downturn stemmed from a 5.1% decline in total revenue to RMB 2.7 billion, as established game titles reached maturity and new projects remained in the development phase. The company’s financial performance was further impacted by a 20% contraction in gross profit, coupled with aggressive capital allocation toward long-term growth, including an 88.9% surge in research and development spending and a 23.2% increase in marketing expenditures.

Despite these financial headwinds, the company’s strategic focus on its TapTap platform yielded significant expansion. Domestic monthly active users grew by 22.8% to 31.6 million, while international engagement surged by 154.3% to 12.2 million. This growth in the information services segment serves as a critical pillar for the company’s future, offsetting the contraction observed in the core game segment. To support these initiatives, the company successfully bolstered its liquidity through the issuance of convertible bonds and share placements, maintaining a robust cash and investment position of approximately RMB 3.96 billion.

Operating primarily within the People’s Republic of China, the company remains committed to its long-term reinvestment strategy despite the absence of a final dividend for the 2021 fiscal year. While total liabilities rose to RMB 2.66 billion due to debt financing, management maintains a stable operational outlook. Governance structures remain consistent, with the chairman and CEO roles held by the same individual, and all financial reporting has been verified by independent auditors to ensure compliance with regulatory standards. The company expects to fully utilize its current capital reserves by the end of 2023 to sustain its ongoing development and marketing pipeline.