XD Inc. Interim Results Announcement: Six Months Ended June 30, 2021

Key insights

6 takeaways

01
XD Inc. reported a net loss of RMB 325 million for the first half of 2021, driven by a 4.3% revenue decline to RMB 1.38 billion and a 164% surge in R&D spending.See it on page 13
02
The TapTap platform saw significant user growth, with domestic monthly active users rising 15.6% and international users increasing by 484.4%.See it on page 4
03
To fund long-term platform development and global expansion, the company raised capital through a USD 280 million convertible bond issuance and strategic share placements to Bilibili and Taobao China.See it on page 37
04
As of June 30, 2021, the company held over RMB 4.3 billion in cash to support its ongoing R&D pipeline and international growth strategy.See it on page 15
05
The company acquired Lean Cloud for RMB 87.6 million to strengthen its data service capabilities and platform infrastructure.See it on page 34
06
Management implemented a new 10-year share option plan to incentivize staff, while maintaining the dual chairman and CEO role for Mr. Huang Yimeng to ensure leadership consistency during this investment phase.See it on page 40

Summary

XD Inc. experienced a period of strategic transition during the first half of 2021, characterized by a pivot toward long-term platform development at the expense of short-term profitability. The company reported a net loss of approximately RMB 325 million, a sharp reversal from the profit recorded during the same period in 2020. This financial downturn was primarily driven by a 4.3 percent decline in total revenue to RMB 1.38 billion, as established game titles reached maturity, coupled with a 164 percent surge in research and development expenditures and increased marketing costs associated with global expansion efforts.

Despite these fiscal pressures, the TapTap platform demonstrated robust growth, with domestic mobile monthly active users rising by 15.6 percent and international users surging by 484.4 percent. This expansion underscores the company’s commitment to its dual-segment model of game development and information services. To support this trajectory, the firm bolstered its liquidity through a USD 280 million convertible bond issuance and a significant share placement to strategic partners Bilibili and Taobao China. Furthermore, the acquisition of Lean Cloud for RMB 87.6 million reflects a targeted effort to enhance data service capabilities and platform infrastructure.

As of June 30, 2021, the company maintained a strong cash position exceeding RMB 4.3 billion, providing the necessary capital to sustain its R&D pipeline and international growth strategy. While the company opted not to declare an interim dividend, it solidified its internal governance and incentive structures by approving a new 10-year share option plan. Although the dual role of chairman and CEO held by Mr. Huang Yimeng represents a deviation from standard corporate governance codes, the board maintains that this structure is essential for consistent leadership during this intensive phase of investment and market scaling.