XD INC(HK:02400)2021-04-30 00:30Financial 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].