Dear fellow investors and friends of XD,
We have navigated through another eventful year, marked by significant growth and valuable experiences. It is my pleasure once again to share these experiences and reflections with you.
Last year, we achieved several commendable results. The Company’s annual revenue surpassed RMB5 billion for the first time, representing a year-over-year increase of nearly 50%. Both our game business and TapTap platform operations saw significant revenue growth. More importantly, we successfully got out of the red, achieving a net profit attributable to the parent company of RMB811 million for the full year. This marks the Company’s first instance of achieving substantial annual profit in the last five years and demonstrates the effectiveness of our long-held strategy of
integrating self-developed games with our platform ecosystem.
Frankly, this result was hard-won. Over the past few years, our Company has faced numerous difficulties and challenges, placing considerable pressure on our shareholders. The high-investment, high-risk model of self-developed games also drew some skepticism. Several projects initially expected to perform well encountered varying degrees of setbacks. These experiences and lessons learned are deeply ingrained in our minds, prompting us to make timely adjustments, ultimately leading to positive returns.
Last year, we successively launched GoGo Muffin (出發吧麥芬) globally. The game performed well in various regions around the world, marking a strong start for the Company’s publishing business and generating substantial profits.
The mid-year release of Heartopia (心動小鎮) brought us a significant and pleasant surprise. This game took a very long time to prepare and involved substantial investment, as it encountered many obstacles along the way. Its successful launch was truly not easy. However, upon release, the enthusiasm and welcome from players brought us great joy. The project quickly surpassed 20 million downloads on the TapTap platform, indicating the success of our project selection. The life simulation genre we chose is relatively scarce in the current market, yet player demand for this type of game is exceptionally strong. This represents a crucial opportunity, and thus the Company will continue to invest in the Heartopia (心動小鎮) project. Looking ahead, we aim to do even better. We have many ideas waiting to be realized in this genre, and numerous players’ needs awaiting fulfillment. Therefore, we believe that in the current year and the next, the Heartopia project warrants further investment and holds much potential for exciting results.
Last year, we also released the Classic version of Ragnarok M: Eternal Love (仙境傳說RO：守護永恆的愛初心服). Early this year, it was successfully launched in Southeast Asia and the Taiwan region, achieving excellent results in both markets. This game, nearing its ninth year since launch, embodies the Company’s great dream of creating high-quality games. The project initially had immense ambitions, introducing significant innovations in areas like the economic system, free trade, and player experience. However, due to insufficient development experience at the time, design flaws existed, necessitating numerous modifications and patches. Although it ultimately achieved considerable success, many regrets remained.
The Classic version addressed these regrets. Numerous systems, including the economic system, were redesigned and optimized to better align with our original vision. After about a year of optimization in the Mainland China server, the relaunch in Southeast Asia and the Taiwan region proved remarkably successful, earning high praise from veteran RO players. This has given us tremendous confidence.
This year, one of our key plans is to develop the sequel to this game, namely Ragnarok M: Eternal Love II (仙境傳說RO：守護永恆的愛2). We hope to leverage the extensive experience gained from past RO projects, combined with the Company’s enhanced game development capabilities in recent years, to further craft the Ragnarok story into a fully 3D open world for players to explore freely. Simultaneously, we will continue to leverage the team’s grasp of the “friendly world” concept and our deep understanding of MMO game social dynamics, community relationships, long-term goals, and commercial systems, striving to create an even better, more anticipated product.
Additionally, I want to specifically mention Torchlight: Infinite (火炬之光：無限). This game has been online for nearly two years and has faced numerous challenges and setbacks. Encouragingly, since last year, we adjusted the product’s design philosophy, which received very positive feedback. Since the end of last year, each season has shown progressive improvement in the game’s performance, and recognition among core players has gradually increased, helping us build our brand and reputation within the ARPG genre. We believe Torchlight: Infinite (火炬之光：無限) still has significant growth potential. As its performance improves, we will allocate more resources to address past shortcomings and further enhance product quality.
It is particularly noteworthy that PC users now constitute over half of Torchlight’s core player base. On one hand, this indicates that our gameplay and quality are increasingly recognized by core PC players; on the other hand, it sets higher expectations for us. In the future, we will continue to enrich the game’s content while further optimizing the visual performance on the PC end, making the PC version of Torchlight: Infinite (火炬之光：無限) a more competitive game in the global market for all players.
The upcoming new game Etheria (伊瑟), also developed using the Unreal Engine, represents the Company’s latest production capabilities. Despite intense market competition, we will seek greater differentiation in product positioning. Last year, we already received positive feedback through global tournaments, and this year, we will conduct testing and launches successively across various global regions. Regardless of market performance, this game itself signifies a major breakthrough in our high-quality game production capabilities, providing a mature production pipeline and broad imaginative scope for expanding into more game genres in the future.
Last year, the TapTap platform achieved significant growth. Not only did its market share in the domestic Android game distribution market continue to rise, but its influence as a primary launch platform also grew stronger. Furthermore, the performance of the iOS version showed steady improvement. Despite facing numerous content format restrictions within the Apple ecosystem, the iOS version managed to overcome these limitations and achieve good results. Concurrently, we have noted increasing global discussions regarding the openness of app ecosystems. We look forward to a future where the iOS ecosystem offers broader space for developers and platforms, which would enable TapTap to bring richer, higher-quality services and experiences to iOS players.
Another important advancement for TapTap last year was a major breakthrough in off-platform game promotion. This success was driven by our extensive application of AI recommendation technology. The core advantage of this AI technology lies not only in its ability to help us accurately target and acquire high-quality users off-platform, but also in its capacity to efficiently coordinate with third-party promotional partners (such as streamers, influencers, etc.) through our self-developed system, and rapidly iterate and optimize promotion strategies based on data feedback. This provides us with a strong competitive edge in the game promotion field.
Leveraging this capability, we successfully promoted numerous games last year, including the highly popular Fishing Master (歡樂釣魚大師) at the beginning of the year and our self-developed game Heartopia mid-year. The success of these games largely benefited from the precise reach and efficient conversion achieved by our AI-based off-platform promotion system, leading to rapid user growth. This innovative promotion model is also a result of our long-term deep cultivation in TapTap’s AI technology and algorithms. Within this framework, we believe there is even greater potential and more imaginative possibilities for the future, and have already prepared relevant product plans.
Furthermore, TapTap continued to host numerous game-related activities within the industry and player communities last year, including game launch events, the Spotlight Program, and the annual TapTap Game Awards. While these events may not directly generate specific commercial value, they hold significant meaning for the industry and player communities. At last year’s TapTap Game Awards ceremony, witnessing award winners step onto the brightly lit stage to receive their applause and cheers deeply moved me. Creators in the game industry pour immense passion and dreams into their work, treating games as artistic creations. However, for a long time, external recognition for game creators has been low, often focusing solely on game revenue while overlooking artistic value.
Therefore, the importance of TapTap hosting these events lies in providing a platform for game creators to gain more recognition and appreciation, allowing outstanding creators to gather and reflect on the past year’s experiences together. Such activities are inherently meaningful. As TapTap’s industry influence gradually strengthens and profits show healthy growth, we also hope to take on more responsibility, contributing to the long-term healthy development of industry practitioners and the game industry itself.
Simultaneously, we observe the huge potential of the domestic PC game market and the strengthening PC development capabilities of local developers, presenting new opportunities for TapTap. Aligning with this trend, TapTap will focus on promoting the launch and operation of its PC version this year. We hope to complement existing PC game platforms like Steam, offering more choices and supplementary services to PC players and developers.
TapTap’s PC version, consistent with the mobile version, adopts a complete zero revenue share, non-co-publishing model. This allows game developers to retain 100% of their revenue on the TapTap platform. Additionally, a large number of games, including XD’s own products, are currently cross-platform between mobile and PC. For TapTap mobile users playing on PC, they can download through the same channel, log in with the same account, and engage more smoothly with developers and other players within the same community. Therefore, the goal of the TapTap’s PC version is to better serve the cross-platform game category, providing more comprehensive supplementary services for developers and players. At the same time, we also hope to offer more help and support to developers in the traditional indie game field, assisting them in better developing and publishing their games.
Finally, we have been continuously monitoring the rapid development of AI technology over the past year, which has already brought significant changes to the field of game creation. Soon, AI technology will drastically reduce game development costs in incredible ways, enabling more independent creators to produce astonishingly excellent game works with AI assistance. This represents a crucial development direction for TapTap. We will actively embrace this change and prepare thoroughly for it.
We believe that as AI technology continues to improve, an increasing number of individuals will become developers, leading to an influx of outstanding games — a scenario our platform eagerly anticipates. At the TapTap level, we will provide more support and preparation for this change, helping developers reach users more quickly and directly, enabling more players to experience high-quality games, and consequently providing developers with more positive feedback.
Simultaneously, we aim to establish a more fundamental presence in the AI field, helping developers complete game creation more efficiently, bridging the workflow between ordinary players, creators, and AI tools, and minimizing the barriers and costs of game creation. We believe this initiative will generate immense value and profoundly impact the future development of the game industry.
The above summarizes our work over the past year and offers some outlook for the future. In conclusion, XD Inc. is currently in its best state since the Company went public: we possess stable cash flow, exciting game products, and the long-running TapTap platform. More importantly, we have a core team that has been solidified through long-term refinement and adjustment, including outstanding game producers, creators, development, and operations personnel. We have a solid foundation across multiple aspects, including product development, publishing, and operations. We believe the Company is fully prepared for long-term future development, capable of adhering to the long-term vision of “Gathering the Hearts of Craftsmen, Moving the Emotions of Players” (聚匠人心、動玩家情), and is more confident in facing future changes and challenges.
More importantly, we are in an era brimming with opportunities. The rapid advancement of technology and AI is pushing us towards an unprecedented tipping point; by seizing these opportunities, we can achieve surprising accomplishments. Throughout more than twenty years of our entrepreneurial journey, our team has consistently maintained curiosity and passion for new things. Today, amidst a new wave of changes driven by AI technology, we face unprecedented opportunities, about which we are deeply excited and full of anticipation. We believe that with the support of the Company, our team, and all investors, we have the capability to make cooler, more outstanding, and more valuable contributions in the future. We are full of confidence and excitement, hoping to achieve even better results, and look forward to sharing more and better achievements with everyone next year.
Finally, we once again sincerely thank everyone for your continued trust and support.
Huang Yimeng
Chairman of the Board, XD Inc
