Revenue and Profitability - Revenue for the year ended December 31, 2023, was RMB 3,389,144 thousand, a decrease of 1.2% compared to RMB 3,430,936 thousand in 2022[2] - Gross profit increased by 12.7% to RMB 2,068,370 thousand from RMB 1,835,259 thousand in the previous year[2] - The adjusted loss for the year was RMB 9,406 thousand, significantly reduced by 98.1% from RMB 494,256 thousand in 2022[2] - As of December 31, 2023, the company's game business revenue decreased by 14.7% year-on-year to RMB 2,091.7 million[16] - The revenue from online games fell by 15.1% to RMB 1,961.5 million, primarily due to decreased income from titles like "Sausage Man" and "Ulala"[16] - The revenue from paid games decreased by 2.5% to RMB 120.6 million, attributed to a decline in existing titles[16] - The gross profit for the gaming segment was RMB 976,138 thousand, resulting in a gross margin of 47%, while the platform segment achieved a gross profit of RMB 1,092,232 thousand with a gross margin of 84%[53] - The total revenue recognized at a point in time was RMB 2,292,354 thousand for the year ended December 31, 2023, compared to RMB 1,799,699 thousand in 2022[56] User Metrics - Average monthly active users for online games decreased by 23.3% to 12,446 thousand from 16,224 thousand in 2022[3] - Average monthly paying users for online games decreased by 16.9% to 1,307 thousand from 1,573 thousand in 2022[3] - The TapTap platform's average monthly active users for the Chinese version decreased by 13.6% to 35,810 thousand from 41,451 thousand in 2022[3] - The average MAUs for the TapTap international version decreased by 36.6% to 5.8 million, mainly due to reduced marketing efforts and the impact of popular games[13] Cost Management - The cost of revenue decreased by 17.2% year-on-year to RMB 1,320.8 million[19] - Game business revenue cost decreased by 16.6% to RMB 1,115.5 million for the year ended December 31, 2023, primarily due to reduced revenue sharing and commissions from game developers and distribution platforms[21] - TapTap platform revenue cost decreased by 20.3% to RMB 205.2 million for the year ended December 31, 2023, mainly due to a reduction in bandwidth and server hosting costs[22] - Sales and marketing expenses decreased by 6.2% to RMB 865.2 million for the year ended December 31, 2023, due to cost-cutting measures[24] - R&D expenses decreased by 20.9% to RMB 1,015.7 million for the year ended December 31, 2023, attributed to reduced employee benefits and a decrease in the number of R&D personnel[25] - General and administrative expenses decreased by 3.9% to RMB 224.6 million for the year ended December 31, 2023, mainly due to a reduction in back-office staff[26] Financial Performance - Net loss for the year ended December 31, 2023, was RMB 65.4 million, significantly reduced from a net loss of RMB 574.0 million in the previous year[29] - Adjusted EBITDA for the year ended December 31, 2023, was RMB 158.4 million, compared to an adjusted EBITDA loss of RMB 353.0 million in the previous year[31] - The company reported a basic and diluted loss per share of RMB 0.18 for the year ended December 31, 2023, compared to RMB 1.17 in the previous year, showing a reduction in loss per share[40] Assets and Liabilities - The company's cash and cash equivalents, along with short-term investments, increased to RMB 3,206,821 thousand as of December 31, 2023, from RMB 3,098,084 thousand as of December 31, 2022[35] - The asset-liability ratio decreased to 57.6% as of December 31, 2023, down from 60.3% as of December 31, 2022, indicating improved financial stability[37] - Total assets decreased from RMB 4,796,054 thousand in 2022 to RMB 4,409,442 thousand in 2023, representing a decline of approximately 8.1%[41] - Total liabilities decreased from RMB 2,890,405 thousand in 2022 to RMB 2,540,691 thousand in 2023, representing a reduction of approximately 12.1%[43] - The company reported a significant decrease in property, plant, and equipment from RMB 96,211 thousand in 2022 to RMB 43,693 thousand in 2023, a decline of about 54.6%[41] Future Plans and Developments - The launch of new games such as "Torchlight: Infinite" and "T3 Arena" is expected to drive future revenue growth despite a decline in the main game "Sausage Man" revenue[5] - The company plans to further utilize AIGC technology to enhance content production efficiency and user service capabilities[5] - The company aims to launch the "Ragnarok M" original version server in the first half of 2024 to improve player experience[8] - The company plans to launch multiple new games in both domestic and international markets in 2024, expanding its product lines[10] Corporate Governance and Compliance - The audit committee has reviewed the audited consolidated financial statements for the year ended December 31, 2023, confirming compliance with applicable accounting principles and standards[90] - The company has adopted a corporate governance code and has complied with all applicable provisions, except for the separation of the roles of Chairman and CEO[88] - The company has confirmed that all directors have complied with the standard code for securities trading as of December 31, 2023[89] Convertible Bonds and Financial Instruments - The company issued convertible bonds with a total principal amount of USD 280 million at an annual interest rate of 1.25%, maturing on April 12, 2026[74] - The company plans to redeem all unexercised convertible bonds totaling $159,600,000 on April 12, 2024, as per the bondholders' request[87] - The company repurchased convertible bonds with a principal amount of USD 55 million in November and December 2023, with a liability portion of RMB 383 million and a difference of RMB 6 million recognized as "other losses" in the comprehensive income statement[77]

Revenue and Profitability - Revenue for the first half of 2023 reached RMB 1,753,102 thousand, a 10.0% increase from RMB 1,594,037 thousand in the same period of 2022[11]. - The company's total revenue for the six months ended June 30, 2023, was RMB 1,753.1 million, compared to RMB 1,594.0 million for the same period in 2022, marking a year-on-year increase[28]. - As of June 30, 2023, the company's game revenue increased by 2.1% year-on-year to RMB 1,149.9 million, with online game revenue rising by 3.7% to RMB 1,080.1 million[29]. - The information services segment saw a revenue increase of 29.0% year-on-year to RMB 603.2 million, driven by an increase in new game launches in the Chinese market[33]. - The company reported a net profit of RMB 102.8 million for the period, a significant turnaround from a net loss of RMB 381.4 million in the previous year[44]. - Adjusted profit attributable to equity holders was RMB 112.98 million, compared to a loss of RMB 342.50 million in the first half of 2022[50]. - Gross profit increased by 32.5% to RMB 1,037.3 million, with a gross margin of 59.2%, up from 50.9% in the previous year[38]. - Operating profit for the six months was RMB 122,693 thousand, a turnaround from an operating loss of RMB 406,427 thousand in the previous year[112]. - The total comprehensive income for the six months ended June 30, 2023, was RMB 114,440,000, compared to a loss of RMB 332,822,000 in the same period of 2022, representing a significant turnaround[113]. User Engagement and Game Performance - Average monthly active users for online games decreased by 13.5% to 13,269 thousand compared to 15,346 thousand in the previous year[12]. - Average monthly paying users for online games decreased by 9.2% to 1,389 thousand from 1,530 thousand year-on-year[12]. - TapTap's average monthly active users for the Chinese version decreased by 18.6% to 33,967 thousand, while the international version saw a 20.5% decline to 7,135 thousand[12]. - The launch of "Torchlight: Infinite" and "T3 Arena" contributed to user growth, offsetting declines from "Sausage Man" and other titles[18]. - The top five games by revenue contribution included "Sausage Man," "Ragnarok M," "Torchlight: Infinite," "Ulala," and "Shen Xian Dao (HD)"[18]. - The average monthly active users (MAUs) for the TapTap China version app decreased by 18.6% year-on-year to 34.0 million as of June 30, 2023, but rebounded to 39.3 million in July 2023[24]. Cost Management and Expenses - The company maintains a disciplined cost control strategy, which has helped return to profitability in the first half of 2023[16]. - The company's cost of revenue decreased by 11.7% year-on-year to RMB 715.8 million for the six months ended June 30, 2023[34]. - Sales and marketing expenses decreased by 18.2% to RMB 330.4 million, primarily due to cost-cutting measures[39]. - R&D expenses fell by 19.6% to RMB 527.8 million, attributed to a reduction in employee benefits and a decrease in the number of R&D staff from 1,387 to 1,143[40]. - General and administrative expenses decreased by 2.6% to RMB 101.8 million, mainly due to a reduction in back-office staff[41]. - Total expenses for the six months ended June 30, 2023, were RMB 1,673.944 million, down from RMB 1,975.768 million in 2022, indicating a decrease of approximately 15.3%[165]. Financial Position and Investments - Cash and cash equivalents increased to RMB 3.30 billion as of June 30, 2023, up from RMB 3.10 billion at the end of 2022[51]. - The company's short-term investments amounted to RMB 428.17 million, with an annualized return rate between 2.35% and 3.86%[52]. - The debt-to-asset ratio improved to 58.1% as of June 30, 2023, down from 60.3% at the end of 2022[53]. - The company has no significant investments, acquisitions, or disposals as of June 30, 2023[54]. - The company has allocated RMB 556.5 million from share placement proceeds to enhance R&D capabilities and game portfolio, with no funds utilized yet[67]. - The company reported a foreign currency translation gain of RMB 8,774,000 for the period, compared to a gain of RMB 48,183,000 in the previous year[113]. - Total assets as of June 30, 2023, amounted to RMB 4,803,884,000, slightly up from RMB 4,796,054,000 at the end of 2022[116]. - Non-current liabilities decreased to RMB 177,205,000 from RMB 2,019,899,000, reflecting a significant reduction in long-term debt[117]. - The equity attributable to equity holders of the company increased to RMB 2,017,394,000 from RMB 1,888,329,000, indicating a strengthening of the company's financial position[116]. Shareholder Information and Stock Options - The company granted a total of 852,678 stock options on July 6, 2023, under its stock option plan adopted on June 25, 2021[68]. - The company’s chairman and CEO, Huang Yimeng, holds 157,605,000 shares, representing 32.80% of the total issued shares as of June 30, 2023[77]. - The stock option plan does not attach performance targets, aligning the interests of participants with those of the company and its shareholders[90]. - The total number of shares that can be issued under the stock option plan is 48,020,663 shares, accounting for 10% of the issued shares[92]. - The maximum number of shares that may be issued under the stock option plan cannot exceed 10% of the issued shares as of the adoption date, totaling 48,043,070 shares[87]. - The company has a stock option plan that was adopted on June 25, 2021, with a remaining term of approximately 8 years as of June 30, 2023[85]. Future Plans and Strategic Focus - The company plans to further integrate AIGC technology into game development to enhance content production efficiency and user service capabilities[16]. - The company plans to launch new games, including "Sword of Convallaria" in Q4 2023, and "GoGo Muffin" in late 2023 or early 2024[20]. - The company aims to enhance its international version team and focus on targeted version development and operations in key overseas markets[25]. - The company plans to continue focusing on market expansion and new product development to drive future growth[118]. - The company plans to reinvest its cumulative undistributed profits of RMB 1,348 million in its Chinese subsidiaries for further business expansion, with no dividends declared to foreign shareholders in the foreseeable future[172].

Financial Performance - Revenue increased by 10.0% to RMB 1,753,102 thousand in the first half of 2023 compared to RMB 1,594,037 thousand in the same period last year[3] - Gross profit rose by 32.5% to RMB 1,037,261 thousand from RMB 782,915 thousand year-over-year[3] - Net profit for the period was RMB 102,788 thousand, a significant improvement from a net loss of RMB 381,395 thousand in the first half of 2022[3] - Adjusted EBITDA for the first half of 2023 was RMB 184.8 million, compared to an adjusted EBITDA loss of RMB 246.4 million in the same period last year[6] - Total revenue for the six months ended June 30, 2023, increased to RMB 1,753.1 million, with gaming revenue contributing 65.6% (RMB 1,149.9 million, up 2.1% YoY) and information services contributing 34.4% (RMB 603.2 million, up 29.0% YoY)[16][17] - Revenue from online games increased by 3.7% YoY to RMB 1,080.1 million, driven by games like *Sausage Man*, *Torchlight: Infinite*, and *T3 Arena*, partially offset by declines in mature games like *Ulala* and *Ragnarok M*[17] - Revenue from paid games decreased by 11.2% YoY to RMB 64.5 million due to reduced income from existing paid games[17] - Revenue from information services grew 29.0% YoY to RMB 603.2 million, driven by increased marketing demand and improved ad systems, despite a decline in MAUs[19] - Total cost of revenue decreased by 11.7% YoY to RMB 715.8 million, with gaming cost of revenue at 52.7% of gaming revenue (RMB 606.4 million) and information services cost at 18.1% of information services revenue (RMB 109.5 million)[20][21] - Revenue recognized on a gross basis for gaming operations increased by 7.5% YoY to RMB 1,044.4 million, while revenue recognized on a net basis decreased by 29.9% YoY to RMB 100.3 million[18] - Gross profit increased by 32.5% YoY to RMB 1,037.3 million, with gross margin rising to 59.2% from the previous year[24] - Game division gross margin increased to 47.3% from 40.1% YoY, driven by higher-margin self-developed games like "Torchlight: Infinite" and "T3 Arena"[24] - Information services division gross margin increased to 81.9% from 70.7% YoY, contributing to overall margin improvement[24] - Net profit for the period was RMB 102.8 million, compared to a net loss of RMB 381.4 million in the same period last year[30] - EBITDA improved significantly to RMB 158.2 million from a loss of RMB 286.7 million in the previous year[31] - Adjusted net profit for the period was RMB 129.6 million, compared to an adjusted net loss of RMB 332.7 million in the same period last year[33] - Net profit attributable to equity holders of the company was RMB 90,194 thousand in H1 2023, compared to a loss of RMB 386,056 thousand in H1 2022[34] - Revenue for H1 2023 was RMB 1,753,102 thousand, up from RMB 1,594,037 thousand in H1 2022[38] - Gross profit for H1 2023 was RMB 1,037,261 thousand, compared to RMB 782,915 thousand in H1 2022[38] - Operating profit for H1 2023 was RMB 122,693 thousand, a significant improvement from an operating loss of RMB 406,427 thousand in H1 2022[38] - Net profit for H1 2023 was RMB 102,788 thousand, compared to a net loss of RMB 381,395 thousand in H1 2022[38] - Basic earnings per share for H1 2023 were RMB 0.19, compared to a loss per share of RMB 0.82 in H1 2022[39] - Total revenue for the six months ended June 30, 2023, was RMB 1,753.1 million, with the gaming segment contributing RMB 1,149.9 million and the information services segment contributing RMB 603.2 million[48] - Gross profit for the six months ended June 30, 2023, was RMB 1,037.3 million, with a gross margin of 59%[48] - Revenue from the top five external customers for the six months ended June 30, 2023, was approximately RMB 614 million, compared to RMB 505 million for the same period in 2022[49] - Revenue from one customer in the information services segment accounted for 19% of the company's total revenue for the six months ended June 30, 2023[49] - The gaming segment's revenue from free-to-play games was RMB 1,080.1 million, while revenue from pay-to-play games was RMB 64.5 million for the six months ended June 30, 2023[48] - The information services segment's revenue from performance-based online promotion services was RMB 582.1 million for the six months ended June 30, 2023[48] - Total revenue for the six months ended June 30, 2023, was RMB 1,753,102 thousand, compared to RMB 1,594,037 thousand in the same period in 2022, representing a 10% increase[50] - Game operation revenue from Mainland China for the six months ended June 30, 2023, was RMB 769,973 thousand, up 13.8% from RMB 676,591 thousand in 2022[51] - Basic earnings per share for the six months ended June 30, 2023, were RMB 0.19, compared to a loss per share of RMB 0.82 in the same period in 2022[61] - Net profit attributable to equity holders of the company for the six months ended June 30, 2023, was RMB 90,194 thousand, compared to a loss of RMB 386,056 thousand in the same period in 2022[62] User Metrics - Average monthly active users (MAUs) for network games decreased by 13.5% to 13,269 thousand, while average monthly paying users (MPUs) dropped by 9.2% to 1,389 thousand[4] - TapTap China App MAUs declined by 18.6% to 33,967 thousand, and TapTap International App MAUs fell by 20.5% to 7,135 thousand[4] - TapTap China version's average monthly active users (MAUs) decreased by 18.6% YoY to 34.0 million as of June 30, 2023, but rebounded to 39.3 million in July 2023 after strategic adjustments[13] - TapTap International version's average MAUs decreased by 20.5% YoY to 7.1 million as of June 30, 2023, primarily due to reduced marketing efforts and user decline in India[14] Game Portfolio and Development - The company has 20 online games and 29 paid games in its portfolio as of June 30, 2023[7] - Four new online games are currently under development, with "Sword of Convallaria" launched in August 2023 and "GoGo Muffin" expected to launch in Q4 2023 or Q1 2024[10] - TapTap's paid games ecosystem remains strong, with titles like "Terraria" and "Carto" maintaining stable performance[11] Cost Management and Expenses - The company reduced marketing activities to control costs, impacting user growth in both China and international markets[13][14] - Game business revenue cost decreased by 10.1% YoY to RMB 606.4 million, primarily due to reduced revenue from "Ulala" and other licensed games, as well as cost control measures[23] - Information services business revenue cost decreased by 20.0% YoY to RMB 109.5 million, mainly due to reduced bandwidth and server hosting fees[23] - Sales and marketing expenses decreased by 18.2% YoY to RMB 330.4 million, primarily due to cost-cutting measures in TapTap and game divisions[25] - R&D expenses decreased by 19.6% YoY to RMB 527.8 million, with the number of R&D personnel reduced from 1,387 to 1,143[26] - Employee benefits expenses decreased to RMB 570,811 thousand in 2023 from RMB 688,829 thousand in 2022, a 17.1% reduction[52] Financial Position and Investments - Cash and cash equivalents increased to RMB 3,301,473 thousand as of June 30, 2023, up from RMB 3,098,084 thousand as of December 31, 2022[35] - Short-term investments, primarily in low-risk fixed-income instruments, had an annualized return rate ranging from 2.35% to 3.86%[36] - The company's asset-liability ratio decreased to 58.1% as of June 30, 2023, from 60.3% as of December 31, 2022[37] - Total assets as of June 30, 2023, were RMB 4,803,884 thousand, slightly up from RMB 4,796,054 thousand as of December 31, 2022[40] - Total equity attributable to the company's shareholders as of June 30, 2023, was RMB 2,017.4 million, an increase from RMB 1,888.3 million as of December 31, 2022[41] - Total liabilities as of June 30, 2023, were RMB 2,793.2 million, a decrease from RMB 2,890.4 million as of December 31, 2022[41] - The company's total equity and liabilities as of June 30, 2023, were RMB 4,803.9 million, compared to RMB 4,796.1 million as of December 31, 2022[41] - Trade receivables as of June 30, 2023, were RMB 254,633 thousand, a slight increase from RMB 253,362 thousand as of December 31, 2022[62] - Trade receivables aged within 3 months accounted for RMB 230,599 thousand as of June 30, 2023, up from RMB 205,439 thousand as of December 31, 2022[63] - The impairment provision for trade receivables decreased to RMB 1,955 thousand as of June 30, 2023, from RMB 3,918 thousand as of December 31, 2022[64] - Trade receivables denominated in USD decreased to RMB 119,043 thousand as of June 30, 2023, from RMB 152,253 thousand as of December 31, 2022[66] - Trade payables as of June 30, 2023, were RMB 162,132 thousand, down from RMB 203,053 thousand as of December 31, 2022[69] - Trade payables aged within 3 months accounted for RMB 161,392 thousand as of June 30, 2023, down from RMB 202,387 thousand as of December 31, 2022[70] - The net proceeds from the issuance of convertible bonds in April 2021 amounted to approximately USD 275.6 million, with RMB 147.5 million carried forward as of January 1, 2023[74] - The company allocated $148.8 million from convertible bond proceeds to enhance R&D capabilities and game portfolio, with $33.7 million utilized as of June 30, 2023, and $30.8 million remaining unused[75] - $99.2 million was allocated for marketing and promoting games and TapTap, with $32.0 million utilized and $23.4 million remaining unused as of June 30, 2023[75] - The company raised approximately HK$1,113.0 million from share placement in April 2021, with HK$127.5 million carried forward as of January 1, 2023, and HK$10.6 million utilized by June 30, 2023[76][77] - $222.6 million from share placement proceeds was allocated for potential acquisitions and strategic investments, with $10.6 million utilized and $116.9 million remaining unused as of June 30, 2023[77] Corporate Governance and Shareholder Information - The company did not declare or pay any dividends for the six months ended June 30, 2023[72] - A dividend of USD 15 million was approved and paid by the subsidiary X.D. Global (HK) Limited in May 2023, with USD 5.25 million (RMB 36.38 million) paid to non-controlling shareholders[72] - The company granted a total of 852,678 share options on July 6, 2023, including 133,626 to Executive Director Huang Yimeng and 66,813 to Executive Director Dai Yunjie[79] - The company holds 8,437,540 shares under the Restricted Share Unit Plan, representing approximately 1.76% of the issued share capital as of December 31, 2022[78] - The company has fully complied with the Corporate Governance Code except for Code Provision C.2.1, which requires the separation of Chairman and CEO roles, currently held by Huang Yimeng[80] - The Audit Committee reviewed the unaudited consolidated financial statements for the six months ended June 30, 2023, and discussed accounting policies, risk management, and internal controls[82] - The company's board of directors consists of executive directors Huang Yimeng, Dai Yunjie, and Fan Shuyang, non-executive director Liu Wei, and independent non-executive directors Pei Dapeng, Xin Quandong, and Liu Qianli[85] - The company adopted a Restricted Share Unit Plan on June 3, 2019[85] - The announcement is dated August 31, 2023, and is issued by Huang Yimeng, Chairman and CEO of XD Inc., based in Shanghai, China[85] - The term "RMB" refers to the legal currency of China, and "USD" refers to the legal currency of the United States[85] - The term "China" in the announcement excludes Hong Kong, Macau Special Administrative Regions, and Taiwan[85] - The term "%" refers to percentage[85] - The term "subsidiary" is defined in accordance with the listing rules[85] - The term "Restricted Share Unit" refers to the company's restricted share units[85] - The announcement is related to the Hong Kong Stock Exchange (HKEX)[85] - The company's restricted share unit plan is part of its equity incentive strategy[85] Government Subsidies and Tax - Government subsidies increased significantly to RMB 36,957 thousand in 2023 from RMB 8,052 thousand in 2022, a 359% rise[53] - The company's effective income tax rate for the six months ended June 30, 2023, was 25%, with certain subsidiaries enjoying a preferential rate of 15% due to their status as high-tech enterprises[58] - The company's cumulative undistributed profits for reinvestment in China as of June 30, 2023, amounted to RMB 1,348 million[59] Financial Income and Costs - Financial income net of costs improved to RMB 10,776 thousand in 2023 from a net cost of RMB 17,851 thousand in 2022[55]

Financial Performance - In 2022, the company's game revenue reached RMB 2.45 billion, a year-on-year increase of 22.0%[12] - Total revenue for 2022 increased by 26.9% year-on-year to RMB 3.43 billion, marking a historical high for the company[12] - Gross profit rose by 49.7% year-on-year to RMB 1.84 billion, while adjusted EBITDA narrowed significantly by 56.7% to RMB -353 million[12] - Revenue from online games grew by 29.5% to RMB 2,310.8 million, driven by increased income from "Sausage Man" and new games "T3 Arena" and "Torchlight: Infinite"[28] - The net loss for the year ended December 31, 2022, was RMB 574.0 million, a decrease of 37.4% compared to a net loss of RMB 917.3 million for the year ended December 31, 2021[43] User Engagement and Growth - The average monthly paying user for online games increased by 61.0% year-on-year to 1.573 million[12] - TapTap's average monthly active users grew by 31.3% year-on-year to 41.45 million, with revenue increasing by 41.3% to RMB 978 million[12] - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[58] - As of December 31, 2022, the average monthly active users (MAU) for online games decreased by 2.8% year-over-year, while the average monthly paying users increased by 61.0%[19] Game Development and Launches - Two new games, "Torchlight: Infinite" and "T3 Arena," are set to launch in China in 2023, with ongoing testing for several other games[18] - The company launched four self-developed online games in 2022, including "Flash Party," "T3 Arena," "Torchlight: Infinite," and "Unhappy Raccoon," with "T3 Arena" achieving the top position in the App Store free game download charts in 11 countries[21] - The company has a pipeline of games, including "Lily's Sword," which is ready for global launch pending approval[14] Strategic Focus and Future Plans - The company plans to adjust its goals to focus on resource allocation and operational efficiency rather than short-term gains[13] - The company aims to achieve positive cash flow through business growth and refined operations[13] - The company plans to enhance its TapTap platform in China, focusing on user interaction and optimizing the rating system to improve decision-making value[14] - The company is preparing to leverage AI technologies, particularly in content creation and user interaction, to enhance game production efficiency[15] Financial Management and Investments - The company has allocated USD 148.8 million to enhance R&D capabilities and game portfolio, with USD 35.4 million already spent[171] - The company has a remaining balance of USD 147.5 million from the convertible bond proceeds that is yet to be utilized[171] - The company has allocated HKD 222.6 million for potential acquisitions and strategic investments[173] Corporate Governance and Board Structure - The board consists of three executive directors, one non-executive director, and three independent non-executive directors, ensuring strong independence[66] - The company has adopted a corporate governance code and has complied with all applicable provisions as of December 31, 2022[65] - The board is responsible for overseeing major company affairs, including policy formulation and risk management[65] Diversity and Inclusion - The company aims to maintain at least 10% female representation on the board and is committed to promoting gender diversity in senior management[70] - As of December 31, 2022, the gender ratio among employees is 72.0% male and 28.0% female, with efforts to create a supportive environment for female employees[71] Environmental, Social, and Governance (ESG) Initiatives - The company has established a five-tier governance structure for ESG management, with the board of directors as the highest decision-making body[110] - The company aims to enhance investor relations through effective communication channels, including annual general meetings and reports[111] - The company has committed to sustainable development and has set environmental goals for the current year[110] Employee Welfare and Training - The company provides social insurance benefits, including pension, medical, maternity, work injury, unemployment insurance, and housing fund[139] - Employee turnover rate for 2022 was 37.20%, with a higher rate of 40.10% for female employees[138] - The company has established a training management system that includes six categories: general, technical, artistic, operational, planning, and management training[142] Compliance and Risk Management - The company has established a whistleblowing policy to allow employees and stakeholders to report concerns regarding financial reporting and internal controls[80] - The company has implemented internal procedures to manage compliance risks and ensure adherence to local laws and regulations[95] - The company has established an internal audit function to independently review the adequacy and effectiveness of its risk management and internal control systems[95]

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 3,430,936 thousand, representing a 26.9% increase from RMB 2,703,173 thousand in 2021[2] - Gross profit for the same period was RMB 1,835,259 thousand, a 49.7% increase compared to RMB 1,226,243 thousand in 2021[2] - The adjusted loss for the year was RMB 494,256 thousand, a 44.5% improvement from RMB 890,345 thousand in 2021[2] - The adjusted EBITDA loss narrowed by 56.7% to RMB 353 million in 2022 compared to the previous year[5] - The net loss for the year was RMB 574.0 million, a 37.4% improvement compared to a net loss of RMB 917.3 million in the previous year[30] - The company reported an operating loss of RMB 567,870 thousand for the year ended December 31, 2022, compared to a loss of RMB 955,521 thousand in 2021, representing a 40.5% improvement[31] - Adjusted EBITDA for the year ended December 31, 2022, was a loss of RMB 353,045 thousand, significantly better than the loss of RMB 816,022 thousand in 2021, indicating a 56.7% reduction in losses[31] - The company reported a basic and diluted loss per share of RMB 1.17 for the year ended December 31, 2022, compared to RMB 1.86 in the previous year, indicating an improvement of approximately 37%[39] User Engagement - Average monthly active users (MAU) for online games decreased by 2.8% to 16,224 thousand, while average monthly paying users increased by 61.0% to 1,573 thousand[3] - TapTap's average monthly active users in China increased by 31.3% to 41,451 thousand, while the international version saw a decline of 25.4% to 9,130 thousand[3] - The average monthly active users of the TapTap China version app reached 41.5 million, a year-on-year increase of 31.3%, with game downloads totaling 801.0 million, up 38.3%[12] - TapTap's international version mobile app had an average monthly active user count of 9.1 million, a decrease of 25.4% year-on-year, influenced by specific popular games and the overseas pandemic[13] Game Development and Launches - The company plans to launch new games, including "T3 Arena" and "Torchlight: Infinite," in 2023, along with several other games in testing or launch phases[5] - In 2022, the company launched four self-developed online games, including "Flash Party," "T3 Arena," "Torchlight: Infinite," and "Unhappy Raccoon," with "Flash Party" ranking in the top three of the Apple Store's free game downloads in Japan for an extended period[8] - The company has a portfolio of 22 online games and 25 paid games as of December 31, 2022[6] - "Sausage Man" significantly contributed to revenue growth, with its active user count and payment rate reaching new highs in 2022[6] Revenue Breakdown - As of December 31, 2022, the company's game business revenue increased by 22.0% year-on-year to RMB 2,452.7 million, driven by new games and increased revenue from "Sausage Man" and "T3 Arena"[17] - The revenue from online games grew by 29.5% year-on-year to RMB 2,310.8 million, primarily due to the performance of new titles[17] - The revenue from paid games decreased by 39.4% year-on-year to RMB 123.7 million, attributed to declining income from several existing paid games[17] - The information services business revenue increased by 41.3% year-on-year to RMB 978.2 million, driven by a 31.3% increase in average monthly active users of the TapTap China app to 41.5 million[19] Expenses and Cost Management - The cost of revenue rose by 8.0% year-on-year to RMB 1,595.7 million, with the gaming segment accounting for RMB 1,338.3 million (54.6% of total costs) and the information services segment accounting for RMB 257.3 million (26.3% of total costs)[20][21] - Sales and marketing expenses rose by 18.3% year-on-year to RMB 922.7 million, primarily due to increased marketing spending for TapTap and the launch of four new online games in overseas markets[25] - Research and development expenses increased by 3.4% year-on-year to RMB 1,283.8 million, despite a reduction in the number of R&D personnel from 1,635 to 1,196[26] - General and administrative expenses decreased by 0.6% year-on-year to RMB 233.8 million, attributed to a reduction in back-office staff and lower office expenses due to rent relief policies[27] Financial Position - Cash and cash equivalents decreased to RMB 3,098,084 thousand as of December 31, 2022, from RMB 3,164,726 thousand in 2021, a decline of 2.1%[34] - The company's asset-liability ratio increased to 60.3% as of December 31, 2022, compared to 52.8% in 2021, indicating a rise in financial leverage[36] - The total assets decreased from RMB 5,044,132 thousand in 2021 to RMB 4,796,054 thousand in 2022, reflecting a decline of about 4.9%[40] - The company's equity attributable to equity holders decreased from RMB 2,304,242 thousand in 2021 to RMB 1,888,329 thousand in 2022, a reduction of approximately 18%[40] - Non-current liabilities increased from RMB 1,752,070 thousand in 2021 to RMB 2,019,899 thousand in 2022, marking an increase of about 15.3%[42] Corporate Governance and Compliance - The company has complied with all applicable provisions of the corporate governance code for the year ended December 31, 2022, except for the separation of the roles of Chairman and CEO[84] - The audit committee has reviewed the audited consolidated financial statements for the year ended December 31, 2022, confirming compliance with applicable accounting principles and full disclosure[86] - The consolidated financial statements for the year ended December 31, 2022, have been verified by the auditor and are consistent with the figures disclosed in the announcement[87] - The company adheres to the International Financial Reporting Standards and the corporate governance code as stipulated in the listing rules[89] Stock and Shareholder Information - The company issued 26,318,000 new shares at a price of HKD 42.38 per share, raising approximately RMB 940 million in net proceeds[68] - The company did not declare or pay any dividends for the year ending December 31, 2022, consistent with the previous year[73] - The company has granted a total of 10,375,181 stock options under the stock option plan as of December 31, 2022, to incentivize eligible participants[82] - Following the reporting period, on January 11, 2023, the company granted an additional 942,550 stock options to eligible participants[83]

Financial Performance - Revenue for the first half of 2022 was RMB 1,594,037 thousand, representing a 15.6% increase from RMB 1,378,707 thousand in the same period of 2021[10]. - Gross profit for the first half of 2022 was RMB 782,915 thousand, up 15.7% from RMB 676,699 thousand year-on-year[10]. - The company reported a net loss of RMB (381,395) thousand for the first half of 2022, an 18.3% increase compared to RMB (322,351) thousand in the same period of 2021[10]. - Total revenue for the first half of 2022 was RMB 1,594,037 thousand, compared to RMB 1,378,707 thousand in the same period of 2021, marking a year-on-year increase[24]. - Revenue from games accounted for 70.7% of total revenue in the first half of 2022, down from 75.6% in the same period of 2021[25]. - Information services revenue increased to RMB 467,750 thousand, representing 29.3% of total revenue, compared to 24.4% in the same period of 2021[25]. - Game business revenue increased by 8.0% year-on-year to RMB 1,126.3 million for the six months ended June 30, 2022, driven primarily by revenue growth from "Sausage Man"[27]. - Revenue from online games rose by 10.9% year-on-year to RMB 1,042.1 million, while revenue from paid games decreased by 18.0% to RMB 72.6 million[27]. - The company reported a net loss attributable to equity holders of RMB 386,056 thousand for H1 2022, compared to a net loss of RMB 325,147 thousand in H1 2021, indicating a decline in performance[147]. - Basic loss per share for H1 2022 was RMB 0.82, compared to RMB 0.71 in H1 2021, showing a deterioration in earnings per share[147]. User Metrics - Average monthly active users for online games decreased by 2.2% to 15,346 thousand from 15,690 thousand year-on-year[11]. - Average monthly paying users increased by 88.7% to 1,530 thousand from 811 thousand year-on-year[11]. - TapTap's average monthly active users for the Chinese version reached approximately 41.7 million, a year-on-year increase of 45.5%, with game downloads totaling 402.3 million, up 62.2%[21]. - The international version of TapTap had an average monthly active user count of about 9.0 million, reflecting a year-on-year decrease of 31.9%[22]. Game Portfolio and Development - The current game portfolio includes 20 online games and 22 paid games as of June 30, 2022[16]. - The top five games contributing to revenue as of June 30, 2022, were Sausage Man, Ragnarok M, Ulala, Lan Yan Qing Meng, and Shen Xian Dao (HD)[17]. - Sausage Man, launched in April 2018, saw record high active users and payment rates in the first half of 2022, with significant revenue growth compared to the same period last year[17]. - New self-developed games Flash Party and T3 Arena launched in the first half of 2022, with Flash Party ranking in the top three for free game downloads in Japan[18]. Financial Position and Cash Flow - The company holds approximately RMB 3.8 billion in cash and cash equivalents and short-term investments as of June 30, 2022, indicating sufficient resources for business development[15]. - Cash and cash equivalents as of June 30, 2022, were RMB 2,095.9 million, down from RMB 3,164.7 million as of December 31, 2021[43]. - Total current assets, including cash and short-term investments, decreased to RMB 3,792.4 million as of June 30, 2022, from RMB 3,957.2 million as of December 31, 2021[43]. - The company reported a net cash flow from operating activities of RMB 174.5 million[44]. - The company’s cash flow from operating activities remains strong, with cash on hand and bank cash totaling RMB 1,955,042 thousand as of June 30, 2022[187]. Expenses and Cost Management - Total revenue cost increased by 15.5% year-on-year to RMB 811.1 million, with game business costs rising by 6.0% to RMB 674.3 million[30]. - Sales and marketing expenses rose by 17.2% year-on-year to RMB 403.7 million, primarily due to increased marketing spending for TapTap and new game launches[35]. - R&D expenses increased by 14.0% to RMB 656.4 million for the six months ended June 30, 2022, despite a reduction in R&D personnel from 1,565 to 1,387[36]. - General and administrative expenses decreased by 6.4% to RMB 104.5 million for the same period, primarily due to a reduction in back-office staff and rental savings[36]. Shareholder and Governance Information - The company has a total of 1,890 employees as of June 30, 2022, primarily located in Shanghai[59]. - Major shareholders include Credit Suisse Trust Limited with 229,484,865 shares (47.77%) and Happy Today Company Limited with 157,605,000 shares (32.80%) as of June 30, 2022[72]. - The company has established a competitive compensation and incentive system to attract and retain qualified personnel[60]. - The company has adopted a corporate governance code and has complied with all applicable provisions, except for the separation of the roles of Chairman and CEO, which are held by Mr. Huang Yimeng[61]. Risks and Compliance - The company faces various financial risks, including market risk, credit risk, and liquidity risk, with no significant changes in risk management policies noted for the reporting period[111]. - The audit committee has reviewed the unaudited consolidated financial statements for the six months ending June 30, 2022, ensuring compliance with accounting policies and practices[64]. - The company has confirmed compliance with the standard code for securities trading by its directors for the six months ending June 30, 2022[63]. Investments and Acquisitions - The company has not yet monetized the international version of TapTap[29]. - The company has no major investments or acquisitions as of June 30, 2022[45]. - The company plans to continue exploring mergers and acquisitions to enhance its market presence and product offerings[108]. - The company acquired 100% of Lean Cloud (Hong Kong) Limited for a total cash consideration of RMB 876 million, with RMB 83.2 million paid as of June 30, 2022[199].

Product Development and Launches - In 2021, the company launched 5 products for TapTap's bonfire testing, including "Flash Party" and "T3 Arena," which maintained continuous updates for a year, accumulating loyal fans and KOLs[9] - The company hosted a TapTap launch event showcasing multiple self-developed games, marking a significant milestone after years of development[10] - TapTap plans to launch multiple self-developed games overseas this year, including "Flash Party" and "T3 Arena," focusing on user scale and retention initially[13] - The company has a robust pipeline with 13 new game projects under development, aiming for gradual online launches in the coming years[17] - The company aims to explore more business models and types of premium games to better support developers and serve players[11] Financial Performance - As of December 31, 2021, the company reported total revenue of RMB 2,703.2 million, a decrease of 5.1% from RMB 2,847.6 million in 2020[28] - Game revenue decreased by 13.8% to RMB 2,010.8 million, with online game revenue down 17.0% to RMB 1,784.0 million, primarily due to declining income from mature games[30] - Paid game revenue increased by 42.0% to RMB 204.0 million, driven by strong performances from titles like "Muse Dash" and "Terraria Mobile" launched in 2021[30] - Information services revenue grew by 34.3% to RMB 692.4 million, attributed to increased user engagement on TapTap and improved advertising system efficiency[33] - The company recorded a net loss of RMB 917.3 million for the year ended December 31, 2021, compared to a net profit of RMB 55.8 million in the same period of 2020[45] User Engagement and Growth - TapTap achieved nearly 600 million game downloads in 2021, representing a year-on-year increase of 42.1%, despite a 5-month halt in new game approvals in China[11] - TapTap's average monthly active users in China reached 31.6 million, a year-on-year increase of 22.8%, with game downloads totaling 579.4 million, up 42.1%[23] - TapTap's international version achieved a monthly active user count in the tens of millions, laying a solid foundation for future overseas expansion[17] - The average monthly active users (MAU) for online games decreased by 33.7% year-on-year, while the average monthly paying users (MPU) increased by 6.5%[19] - The company reported that the increase in downloads was not solely from competition with other platforms but also from providing a platform for independent games and small developers[11] Corporate Governance - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[65] - The board consists of three executive directors, one non-executive director, and three independent non-executive directors, ensuring strong independence[69] - The company has confirmed the independence of all independent non-executive directors in accordance with listing rules[72] - The company has established four committees: Audit Committee, Remuneration and Assessment Committee, Strategic Development Committee, and Nomination Committee, each with specific responsibilities[83] - The board is committed to reviewing its diversity policy annually to ensure its effectiveness[76] Research and Development - The company plans to focus R&D investments on globally suitable game products and aims to achieve breakeven by 2023 using its own funds[7] - Research and development expenses increased by 88.9% year-on-year to RMB 1,242.2 million, attributed to a rise in the number of R&D personnel and enhanced employee benefits[42] - The company has 13 games in development, with five undergoing "campfire testing" and plans for more games to launch in 2022[20] - TapTap developer services were opened to third-party developers, providing features like real-time voice and cloud saves, serving over 100 games[26] - The company emphasizes the importance of diverse game offerings, responding to the growing demand for premium games among players[11] Employee Welfare and Development - The company provided training opportunities for employees, with a training participation rate of 42.2% for male employees and 26.7% for female employees, averaging 5.2 and 5.6 hours of training respectively[170] - The company has a structured promotion pathway, allowing employees to explore career directions and providing opportunities for advancement in both professional and management tracks[183] - The company has established a psychological health assistance program (EAP) to support employees and their families[194] - The company conducts annual integrity education training for all employees and directors to enhance awareness of anti-corruption practices[149] - The company has implemented ergonomic office furniture and wellness activities to address potential health issues from prolonged desk work[196] Environmental, Social, and Governance (ESG) Initiatives - The company is committed to addressing important ESG matters and has developed strategies and policies to ensure compliance with legal and regulatory requirements[89] - The ESG report covers the company's main business areas, including game development, operation, publishing, and community services[127] - The company has identified 14 key ESG issues through stakeholder engagement and materiality assessment[136] - The company has implemented a robust information security management system, achieving national information security level protection certification (Level 3)[139] - The company aims to reduce resource consumption by 5% annually per capita for electricity and water, in line with its sustainability goals[198] Financial Management and Risks - The company has adopted financial risk management policies to control financial risks, including tax and currency risks[112] - The company has established a risk management and internal control management system covering various business processes, including procurement, sales, and financial reporting[109] - The company has a framework for regular risk assessments to ensure effective operation of risk management and internal control[109] - The company has established a comprehensive communication strategy with shareholders, including annual meetings, reports, and a dedicated investor relations email[123] - The company has implemented internal procedures to manage compliance risks and ensure adherence to local laws and regulations[113]

Financial Performance - Revenue for the first half of 2021 was RMB 1,378,707, a decrease of 4.3% compared to RMB 1,440,481 in the same period of 2020[9]. - Gross profit for the first half of 2021 was RMB 676,699, down 18.1% from RMB 825,800 in the previous year[9]. - The company reported a loss attributable to equity holders of RMB 322,351 for the first half of 2021, compared to a profit of RMB 259,912 in the same period of 2020, representing a decline of 224.0%[9]. - Game revenue decreased by 12.2% year-on-year to RMB 1,043.0 million, primarily due to a 15.4% decline in online game revenue to RMB 940.0 million[22]. - The company reported a net loss attributable to equity holders of RMB 325,147 thousand for the six months ended June 30, 2021, compared to a profit of RMB 206,546 thousand in the same period of 2020, representing a significant decline[132]. - The company reported a total comprehensive loss of RMB 350,599 thousand for the period, compared to a total comprehensive income of RMB 272,182 thousand in 2020[79]. User Engagement - Average monthly active users (MAU) for online games decreased by 48.5% to 15,690 thousand from 30,474 thousand year-on-year[10]. - Average monthly paying users for online games decreased by 17.4% to 811 thousand from 982 thousand year-on-year[10]. - The international version of the TapTap app saw a significant increase in average monthly active users, rising by 484.4% to 13,183 thousand from 2,256 thousand year-on-year[10]. - TapTap's average monthly active users for the Chinese version reached 28.7 million, a year-on-year increase of 15.6%, with game downloads totaling 248.1 million, up 12.8%[18]. - The international version of TapTap saw a significant increase in average monthly active users, reaching 13.2 million, a year-on-year growth of 484.4%[18]. Cash and Investments - The company has over RMB 4.3 billion in cash and cash equivalents and short-term investments as of June 30, 2021, providing sufficient resources for business development[12]. - As of June 30, 2021, cash and cash equivalents were RMB 1,905.2 million, down from RMB 2,319.5 million at the end of 2020[37]. - The company issued convertible bonds with a total principal amount of USD 280 million at an interest rate of 1.25%, maturing on April 12, 2026[37]. - The net proceeds from the convertible bond issuance were approximately USD 275.6 million[44]. - The company completed a placement of 26,318,000 new shares at a price of HKD 42.38 per share, raising approximately HKD 1,113.0 million in net proceeds[48]. Expenses and Costs - The cost of revenue increased by 14.2% year-on-year to RMB 702.0 million, with game costs accounting for 61.0% of total revenue costs[27]. - Sales and marketing expenses increased by 23.8% year-on-year to RMB 344.5 million, driven by higher marketing expenditures for TapTap and the gaming segment[32]. - Research and development expenses surged by 164.0% year-on-year to RMB 575.9 million, attributed to an increase in the number of R&D personnel from 1,065 to 1,565[33]. - The company's gaming business revenue cost increased by 10.1% year-on-year to RMB 636.1 million, primarily due to hiring professionals for local operations in Southeast Asia and increased employee benefits for gaming operations[30]. Corporate Governance and Compliance - The company has complied with all applicable corporate governance code provisions, except for the separation of the roles of Chairman and CEO, which are held by the same individual[60]. - The audit committee has been established in accordance with Listing Rules and consists of three members, with Mr. Xin Quandong as the chairman[63]. - The company has not adopted any new accounting standards that would have a significant impact on the interim financial statements for the period ending June 30, 2021[96]. Future Plans and Developments - The company is focusing on the development of 13 existing game projects and restructuring the technology architecture of TapTap for future growth[12]. - The company plans to continue launching major updates for existing games, including a Disney collaboration version for "Ragnarok M" in overseas markets[14]. - The company plans to launch several highly anticipated titles, including "Terraria mobile" and "Eastward," across multiple platforms in the second half of 2021[16]. - The company has opened TapTap Developer Services (TDS) to third-party developers, with nearly 100 games integrated into TapSDK, enhancing user engagement and monetization opportunities[18]. Shareholder Information - As of June 30, 2021, Mr. Huang Yimeng holds 157,605,000 shares, representing 32.80% of the company's total shares[67]. - Credit Suisse Trust Limited holds 229,484,865 shares, representing 47.77% of the company's total shares[71]. - The total number of shares held under the Restricted Share Unit Plan is 8,437,540, accounting for approximately 1.76% of the company's issued share capital[73]. - The company did not declare any interim dividends for the six months ended June 30, 2021[50]. Assets and Liabilities - Total assets as of June 30, 2021, amounted to RMB 5,529,806 thousand, an increase from RMB 3,344,742 thousand as of December 31, 2020[82]. - Total liabilities as of June 30, 2021, were RMB 2,492,470 thousand, compared to RMB 764,616 thousand as of December 31, 2020[83]. - The company’s total equity attributable to owners of the company increased to RMB 43,832 million as of June 30, 2021, from RMB 21,609 million at the beginning of the year, representing a growth of approximately 103%[152]. Market and Economic Factors - The company benefited from a reduced corporate income tax rate of 15% for certain subsidiaries classified as "high-tech enterprises" in China[12]. - The expected return rate for financial products issued by commercial banks ranged from 2.90% to 4.27%[108]. - The company’s management has made significant judgments and estimates in preparing the interim financial information, consistent with the 2020 financial statements[109].

Financial Performance - The company reported its first full fiscal year since going public in 2020, focusing on long-term value rather than short-term stock price[8]. - Total revenue for the year ended December 31, 2020, was RMB 2,847.6 million, slightly up from RMB 2,838.1 million in 2019[54]. - Game revenue decreased by 2.0% year-on-year to RMB 2,332.0 million, with online game revenue down 7.4% to RMB 2,148.3 million[55][56]. - Revenue from paid games surged by 158.1% year-on-year to RMB 143.7 million, driven by new game launches[56]. - Information services revenue grew by 12.2% year-on-year to RMB 515.6 million, attributed to a 43.7% increase in average monthly active users of the TapTap app[58]. - Gross profit decreased by 13.5% year-on-year to RMB 1,532.0 million, with a gross margin decline from 62.4% in 2019 to 53.8% in 2020[63]. - Net profit for the year decreased by 89.1% year-on-year to RMB 55.8 million[68]. - Profit attributable to equity holders decreased by 97.4% year-on-year to RMB 9.1 million[69]. - Cash and cash equivalents increased to RMB 2,319.5 million as of December 31, 2020, up from RMB 1,336.9 million in 2019[71]. - The company had no borrowings or unused bank financing as of December 31, 2020[72]. Market Opportunities - The gaming industry presents significant generational opportunities, including the transition from single-platform to multi-platform games and from one-time purchase products to ongoing paid services[12]. - The global gaming industry is experiencing a generational shift, presenting significant opportunities for Chinese game developers[16]. - China has the largest local gaming market, with the highest R&D budget in mobile gaming, enabling the development of large-scale cross-platform projects[17]. - The unique "platform + development" opportunity allows the company to attract users to TapTap, enhancing revenue and user retention through exclusive games[18]. - The company aims for a high level of user growth in overseas markets, leveraging insights from user behavior and needs[35]. Game Development and User Engagement - The company aims to enhance production efficiency and capitalize on market opportunities to become a leading company in the gaming sector[11]. - The company recognizes the need for continuous improvement and iteration in game development, similar to the evolution of "League of Legends" over the past decade[14]. - Future gaming experiences will be cloud-based, allowing for cross-device accessibility and continuity regardless of hardware changes[15]. - The company is committed to creating high-quality games that resonate emotionally with players, moving away from generic and low-quality productions[11]. - TapTap is the first gaming platform that does not take a revenue share from developers, fostering a collaborative environment with both developers and players[18]. - The company aims to become a full-cycle platform for players, providing comprehensive services from game discovery to discussion[19]. - The average monthly active users and average monthly paying users for online games increased by 28.6% and 27.4% year-over-year, respectively, primarily driven by the popularity of "Sausage Man"[41]. - TapTap's domestic MAU grew by 43.7% year-on-year, while overseas MAU increased by 330%[34]. Research and Development - The number of R&D personnel increased from 806 to 1,355, with R&D spending growing by 110% year-on-year[32]. - Research and development expenses increased by 107.0% year-on-year to RMB 657.5 million, driven by an increase in R&D personnel from 806 to 1,355[65]. - The company is focused on enhancing its research and development capabilities and user scale growth as part of its long-term strategy[39]. - The company emphasizes a culture of "Context, not Control" to maximize production efficiency and innovation capabilities[29]. Corporate Governance - The company has established a strong foundation in corporate governance with a dedicated board secretary and compliance oversight[86]. - The company has expanded its board with independent directors who bring extensive experience in investment and technology, enhancing governance and strategic oversight[87][89][90]. - The board consists of four executive directors, two non-executive directors, and three independent non-executive directors, ensuring strong independence[98]. - The company has adhered to all applicable corporate governance code provisions as of December 31, 2020[94]. - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[94]. Environmental, Social, and Governance (ESG) Initiatives - The company confirmed the relevance and importance of environmental, social, and governance (ESG) matters to its business and stakeholders[113]. - The company released its 2020 Environmental, Social, and Governance (ESG) report, covering the period from January 1, 2020, to December 31, 2020[143]. - The ESG report identified 14 key ESG issues through stakeholder engagement and materiality assessment[152]. - The company aims to reduce emissions and promote energy conservation as part of its environmental strategy[151]. - The company has established a comprehensive internal system to manage information security risks and protect user data[155]. Employee Management and Development - The company has established a comprehensive human resources management system to regulate employee rights and benefits[177]. - The employee training participation rate was 72% for male employees and 28% for female employees, with an average training time of 5.2 hours for males and 5.9 hours for females[175]. - The company has implemented a recruitment management system to ensure fair competition and has removed non-compete agreements for new hires since June 2020[179]. - The company has established a competitive compensation system, including base salary, monthly allowances, performance bonuses, and year-end bonuses, to attract top talent[180]. - The company has implemented an unlimited vacation policy in 2020, allowing employees to flexibly arrange time off without affecting work progress[181]. Community Engagement and Social Responsibility - The company actively participates in community development and has a charity management policy in place[169]. - The company donated 25 sets of labor protection supplies to a charity organization in summer 2020 to support vulnerable groups[170]. - The second China Original Art Competition attracted 103 teams and collected 182 entries, promoting high-quality development in the gaming industry[171].

Financial Performance - Revenue for the first half of 2020 was RMB 1,440,481 thousand, representing a 10.0% increase from RMB 1,309,815 thousand in the same period of 2019[10] - Gross profit decreased by 5.9% to RMB 825,800 thousand compared to RMB 877,620 thousand in the first half of 2019[10] - Net profit for the period was RMB 259,912 thousand, down 20.5% from RMB 326,918 thousand in the first half of 2019[10] - Total revenue for the first half of 2020 was RMB 1,440.5 million, an increase of 9.9% compared to RMB 1,309.8 million in the same period of 2019[22] - Gross profit for the first half of 2020 was RMB 825.8 million, down from RMB 877.6 million in the first half of 2019, resulting in a gross margin of 57.3%[22] - The profit attributable to equity holders for the six months ended June 30, 2020, decreased by 12.7% to RMB 206.5 million compared to the same period last year[43] - Basic and diluted earnings per share were RMB 0.49, compared to RMB 0.67 in the same period last year[76] User Engagement - Average monthly active users for online games increased by 65.4% to 30,474 thousand from 18,428 thousand in the same period of 2019[11] - Average monthly paying users for online games rose by 52.2% to 982 thousand from 645 thousand in the first half of 2019[11] - The number of average monthly active users on TapTap reached 24.8 million, a year-on-year increase of 51.9%[20] - TapTap game downloads totaled 219.9 million, reflecting a year-on-year growth of 26.4%[20] Game Development and Launches - The game "Sausage Man" achieved over 100 million downloads, indicating strong user growth and monetization success[17] - Three new games are expected to enter the production phase in the second half of 2020, including "Torchlight: Infinity" and "Project A" (tentative name)[17] - The company added over 250 game developers in the first half of 2020, bringing the total to over 880 employees in game development[17] - The game "Ragnarok M" is undergoing significant updates to improve its quality and attract new users despite a decline in revenue[16] Revenue Segmentation - Revenue from paid games increased by 98.4% year-on-year to RMB 50.5 million, driven by the launch of "Juicy Realm" on Nintendo Switch and mobile platforms[28] - Revenue from online games grew by 3.8% year-on-year to RMB 1,111.3 million, supported by the performance of existing and newly launched games[28] - The gaming segment generated revenue of RMB 1,161.7 million, with online gaming (free-to-play) contributing RMB 1,111.3 million and paid games contributing RMB 50.5 million[113] Expenses and Costs - Research and development expenses rose to RMB 218.1 million, compared to RMB 129.7 million in the first half of 2019[22] - Selling and marketing expenses decreased by 10.6% to RMB 278.2 million, mainly due to reduced marketing spending in the game segment[39] - Cost of revenue increased by 42.2% to RMB 614.7 million, with game business costs rising by 40.8% to RMB 577.9 million[34][37] Cash Flow and Liquidity - As of June 30, 2020, the company's cash and cash equivalents increased to RMB 1,947.0 million from RMB 1,336.9 million as of December 31, 2019[42] - The company generated a net cash inflow from operating activities of RMB 382.4 million for the six months ended June 30, 2020[44] - Cash and cash equivalents increased significantly from RMB 640,761 thousand in 2019 to RMB 1,947,006 thousand in 2020, marking an increase of approximately 203.0%[92] Shareholder Information - As of June 30, 2020, Mr. Huang Yimeng holds 157,605,000 shares, representing 36.82% of the company, and an additional 2,100,000 shares as a beneficial owner[59] - Major shareholders include Credit Suisse Trust Limited with 232,226,065 shares, accounting for 54.26% of the company[64] - The weighted average number of ordinary shares issued increased to 419,514 thousand from 351,921 thousand, reflecting a growth of 19.2%[134] Governance and Compliance - The company has adopted the corporate governance code as per the listing rules and has complied with all applicable provisions, except for the separation of the roles of Chairman and CEO[52] - The company has established a risk committee to oversee compliance with legal and regulatory requirements[53] - The audit committee has reviewed the unaudited consolidated financial statements for the six months ending June 30, 2020, ensuring adherence to accounting standards and practices[55] Investments and Acquisitions - The company is set to acquire an additional 18.34% stake in a subsidiary for a total consideration of RMB 330.2 million, increasing its ownership to 74.12%[50] - The company acquired a new associate company for RMB 10 million, which primarily engages in game development and operations[154] Taxation - Income tax expenses decreased by 31.1% to RMB 25.3 million, with the effective tax rate dropping from 10.1% to 8.9%[40] - Current income tax expense decreased to RMB 29,988 thousand in 2020 from RMB 36,168 thousand in 2019[130] Financial Risks - The company has faced various financial risks, including market risk, credit risk, and liquidity risk, with no significant changes in risk management policies during the reporting period[98] - The company’s capital risk is considered low, and adjustments to dividends or capital returns may be made based on capital cost assessments[98]