XD Inc. Interim Results Announcement: Six Months Ended June 30, 2023

Key insights

7 takeaways

01
XD Inc. swung from a net loss of RMB 381.4 million in H1 2022 to a net profit of RMB 102.8 million in H1 2023.See it on page 20
02
Total revenue rose 10% to RMB 1.75 billion, driven by strong performance in the information services segment and the launch of new gaming titles.See it on page 7
03
Gross profit increased 32.5%, aided by cost controls that reduced spending on research, marketing, and employee benefits.See it on page 10
04
Average monthly active users for both online games and the TapTap platform declined slightly in the first half, though TapTap PRC's growth momentum reportedly recovered by July 2023.See it on page 6
05
Trade receivables and payables are largely contained within a three-month settlement window, indicating stable working-capital management.See it on page 31
06
Capital is being directed toward research and development and strategic investments, funded by earlier convertible bond and share placement proceeds expected to be fully used by end-2023.See it on page 36
07
The Chairman and CEO roles remain combined under one leader, a structure management says is meant to ensure consistent leadership and strategic alignment.See it on page 38

Summary

XD Inc. achieved a significant financial turnaround during the first half of 2023, transitioning from a net loss of RMB 381.4 million in the prior year to a profit of RMB 102.8 million. This recovery was underpinned by a 10% increase in total revenue, which reached RMB 1.75 billion, driven by robust performance in the company’s information services segment and the successful launch of new gaming titles. The shift toward profitability was further bolstered by a 32.5% increase in gross profit, facilitated by disciplined cost-control measures that reduced expenditures in research, marketing, and employee benefits.

The company’s operational landscape during this period reflected a strategic focus on efficiency and long-term sustainability. While average monthly active users for both online games and the TapTap platform experienced slight declines during the first half of the year, management observed a recovery in TapTap PRC’s growth momentum by July 2023. Financial health remains stable, with trade receivables and payables largely contained within a three-month settlement window. Capital allocation continues to prioritize research and development and strategic investments, supported by proceeds from previous convertible bonds and share placements that are projected to be fully utilized by the end of 2023.

Corporate governance remains centralized under a unified Chairman and CEO role, a structure maintained to ensure consistent leadership and strategic alignment. The company continues to adhere to standard financial reporting practices and maintains a stable board composition. By balancing aggressive cost management with targeted investment in its core gaming and platform ecosystems, the organization has successfully stabilized its financial position and established a foundation for future growth within the competitive digital entertainment sector.