--- title: "XD Inc. (Trans): Cautious ST guidance; actively embracing change LT" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/39576982.md" description: "Below is Dolphin Research's Trans of XD Inc.'s FY25 earnings call. For our earnings take, cf. 'XD Inc.: To merit a belief premium, TapTap still has work to do'.Key takeaways: 1) Shareholder returns. A buyback plan announced in Jan 2026 has been more than half executed. Given higher taxes via Stock Connect, management may return capital through repurchase-for-cancellation; no dividend plan for now.2) Guidance. Do not expect a major margin uplift in FY26. The FY25 margin expansion largely reflected NAV-based recognition for the RO international version..." datetime: "2026-03-27T11:20:50.000Z" locales: - [en](https://longbridge.com/en/topics/39576982.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39576982.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39576982.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/topics/39576982.md) | [繁體中文](https://longbridge.com/zh-HK/topics/39576982.md) # XD Inc. (Trans): Cautious ST guidance; actively embracing change LT **Below is Dolphin Research's transcript of XD Inc.'s FY25 earnings call. For the post-earnings read-through, please see** [**'XD Inc.: To Earn a Faith Premium, TapTap Still Needs to Step Up'**](https://longbridge.com/en/topics/39576356)**.** **I. Key takeaways** ![表格描述已自动生成](https://pub.pbkrs.com/uploads/2026/c4bdc86887c2d02fe7f63790cacca9c8?x-oss-process=style/lg) 1\. **Shareholder returns**: A buyback plan announced in Jan 2026 has been more than half executed. Given higher taxes under Stock Connect, future returns may prioritize repurchase and cancellation. There is no dividend plan for now. 2\. **Guidance**: Do not expect a major margin lift in FY26 — the FY25 margin expansion was largely driven by net-basis accounting for Ragnarok Online Intl., a one-off factor not present in FY26. TapTap MAU growth will not be aggressive. 3\. **Opex trend**: The decline in G&A in 2H FY25 mainly reflected the roll-off of one-off management equity incentives. AI had no material P&L impact in FY25, with potentially greater impact in FY26. 4\. **TapTap Maker investment**: Costs will scale with revenue and should not dilute overall margins. Profitability will not come quickly, but the team also does not plan to burn cash aggressively. **II. Call details** **2.1 Management remarks** CEO Huang Yimeng offered brief opening comments, focusing on the following: 1\. **AI and industry change** a. The AI era is catalyzing profound changes and will significantly reshape the game industry. b. The company launched TapTap Maker to use AI to help developers build games at lower cost. c. Internal testing began in Jan and optimization is ongoing. 2\. **Platform vision** a. The company seeks to capture AI-era upside by shipping more interesting products. b. It aims to help more talented developers build the games they love. **2.2 Q&A** **Q: What is the impact of large platforms entering the simulation genre on Xindong Town and the track overall? How will the company respond?** **A:** Xindong Town was a big positive surprise for us. The genre itself is highly innovative, and before our title there was no proof that such games could run as long-cycle live ops.After we validated the genre, more peers and publishers have entered, which is normal and confirms our choice was right. We were early and invested early, which increases our odds of securing stronger player support and cash returns post-launch. That in turn supports longer-term operations.A strong genre will have more than one or two hits, and the key is using our first-mover edge to reinvest player support and revenue back into the product and make it better. With the AI era arriving, the industry may pivot away from pure resource 投入. Creativity, user insight, and sustained live ops — including AI adoption — will matter more. **Q: How do TapTap Maker and ADN relate to the TapTap platform? What are Maker test-user numbers, game counts, investment scale, and the outlook for both new businesses?** **A:** The synergies are very strong. The scarcest asset for TapTap is exclusive content — we lack enough games and player demand for categories is strong.If we have more titles and more exclusives, our competitive edge improves. Games built on Maker have a major advantage: they help creators produce more titles and are natively exclusive to us. ADN is also critical for Maker-built games, enabling creators to monetize more efficiently and at higher margins.Maker has not been live for long and remains in internal testing. We have only invited a few hundred creators so far, but engagement is very high, with roughly 10–20 new games appearing on TapTap daily. We still see many areas to improve. AI tech is evolving rapidly, and we will keep onboarding quality creators while upgrading game-making capabilities.We have high expectations for the road ahead. **Q: How will the AI era change your org structure and headcount?** **A:** With AI Agents emerging, we are at a major inflection point. Org structure, collaboration models, and role design will face big changes and challenges.But it is too early to give a definitive answer, as everyone is still learning and adapting, and the pace of change is very fast. What is clear is our action plan — we have launched TapTap Maker to empower solo creators to build games end-to-end. Internally, we fully embrace AI collaboration.We have been encouraging AI use and learning early, supporting trials and even risk-taking. Given the solid performance last year, we focus more on efficiency gains than pure cost cuts. We want the org to explore AI more calmly, finding new roles and collaboration models.We have long aimed for high talent density, and we believe AI will help us get there. **Q: TapTap MAU and revenue outlook this year? Why did growth slow in 2H FY25?** **A:** TapTap growth depends more on new products. Two drivers stand out: the PC client has large potential given strong domestic support for PC gaming, and TapTap PC is still early with plenty of upside; and whether TapTap Maker can help developers create breakout hits, which is a significant swing factor. Mobile TapTap is already at a high base with deep penetration into target users. We do not expect aggressive MAU growth this year. PC remains on a steady uptrend, while Maker and PC will not directly impact near-term results — we are investing for the long term in high-ceiling areas. **Q: Will TapTap Mobile increase sales and marketing to acquire new users this year? Beyond S&M, what else can drive platform growth?** **A:** We are unlikely to ramp sales spend. In the core gamer segment, TapTap penetration is already high, and forcing growth via S&M is inefficient.We will focus on expanding new users via PC and leveraging Maker-built games to acquire players at lower cost. **Q: How will you capture the opportunity as more multi-platform titles launch on PC?** **A:** This will be a continuous and steady effort. PC users are growing fast, but it is a new category for us.Our playbook: support more new titles from closed tests and pre-registration; partner on high-value titles; leverage PC versions of our own quality games to bring in users; and scale Maker, which natively outputs many PC-playable games. **Q: When will you expand the TapTap Maker test? How do you balance cost and monetization?** **A:** We have not opened broadly yet because we need more definitive validation of the business balance. At the current test scale, we know roughly the per-title creation cost for a creator.What is not yet clear is user uptake on TapTap and the ROI. We are tracking two things: whether the product is good enough to help creators build competitive games, and whether the unit economics work — how to control costs and what returns look like.We will gradually add monetization features and expand testing. As build quality improves and ROI clarifies, we expect to open up to more creators. **Q: ADN client mix, growth outlook, and progress on the aggregation platform?** **A:** ADN is still predominantly gaming clients, but we started expanding into other verticals last year. The team is small and iterating quickly, with priority on polishing the product.The aggregation platform has gone live on aggregated media, and we will not list one by one which platforms are integrated. **Q: Takeaways from Xindong Town overseas and what is the outlook?** **A:** First, we picked a good genre. The team executed very well after the China launch, continuously fixing issues, so the Intl. version shipped with a far more polished build.Combined with our years of global publishing across genres, we were well-prepared operationally. These factors together drove the overseas performance. Challenges remain. There are few precedents for long-cycle ops in this genre, so sustained live ops will be demanding and requires a lot of content to serve players.More competitors may arrive, which could be a positive as we learn from each other. **Q: What is the relationship between TapTap Maker and the prior TapTap Editor?** **A:** TapTap Maker grew out of the Editor team and tech, and we have shifted all internal focus to Maker. We long believed TapTap lacked games and built the Editor to lower dev barriers, but its threshold remained high and was not sufficiently differentiated from traditional engines. With AI, things changed — we redesigned from the ground up for AI-first workflows while reusing internal technical accumulations. Years of investment mean we have a shot when the tech landscape truly shifts. **Q: Will TapTap Maker spending affect next year's margin?** **A:** It should not materially impact margins. We have cost controls, and scale will follow revenue.We are not counting on quick profitability, but we also will not burn a lot of cash. Spend should expand alongside revenue. If at some point we decide to expand aggressively such that margins are affected, that would actually be a positive signal — it would mean we have much higher confidence in the model. **Q: TapTap growth guide for FY26? Why did growth slow in 2H FY25?** **A:** TapTap is now at a high base with deep penetration in target mobile users. MAU growth hinges on breakout hits to expand the user base and on Maker to boost engagement among existing users.Overall, MAU growth this year will not be very aggressive. We expect a richer PC ecosystem and broader AI-driven content creation to benefit TapTap over time. But it is uncertain whether we will see a significant lift this year. **Q: Which game types most effectively drive TapTap users? What is the impact of Apple's lower rev-share?** **A:** Lower Apple rev-share will likely spur more publisher spend, but iOS is a small share for us, so the impact is limited. For TapTap, what we lack most now are new genres — games different from traditional strong categories tend to bring in new users. Exclusives work best. Big-budget titles help in the short term, but to convert into long-term MAU we need a steady pipeline of new-genre titles.If a genre is new and more such games keep coming, TapTap has a much higher chance to capture that cohort. **Q: How is TapTap's organic distribution capability trending?** **A:** Our share of first-install acquisitions has been steadily rising in recent years. In categories like ACG, our share can be even higher.We aim to continue raising this share — the uptick in ad margins reflects game publishers placing more weight on TapTap and allocating more resources to us. **Q: Can margins improve further this year, or will overseas investments dilute them?** **A:** A key driver of the FY25 margin lift was the performance of the Ragnarok Intl. server. Because it is recognized on a net basis overseas, it boosted the Gaming segment margin.There is no such factor in FY26, so margins should not be expected to expand meaningfully. Accounting treatment varies by title and region. **Q: Any specific revenue run-rate for Xindong Town Intl.? How do you view long-term ops?** **A:** We cannot provide specific figures now, and we focus more on long-term performance. Post China launch, long-cycle ops proved challenging.The Intl. launch performed better with more content accumulated, and short-term retention is stronger than in China. But we have not fully solved the long-cycle challenge. The team is focused on long-term content and gameplay exploration.We do not plan to disclose single-title revenue; third-party numbers may deviate, so please refer to our annual and interim reports. **Q: How to interpret the change in minority interests in 2H FY25? How do TapTap profit and revenue relate?** **A:** TapTap's cost structure is different, and its profit does not fully track revenue. We did not provide a detailed breakdown in the release, so we cannot split it here.Logically, that reasoning is sound. **Q: The annual report mentions two pipeline titles — any color on the product roadmap?** **A:** We have two tracks. One extends our legacy strengths — for example, the RO team is building a new title (Eternal Love 2), and the Muffin team is also working on a new game.This is a pivotal moment for all studios as production methods are undergoing a step-change. We are fortunate that most projects are still early, and overall margins and profits are healthy, so we are not in a rush to ship. We care more about future-proof production methods and getting them right.Beyond traditional greenlights with upgraded workflows, we will also try completely different directions and methods. In the AI era, some projects may launch quickly and look more like toys. They may still surprise on the upside. **Q: Where is AI investment reflected? Did AI contribute to lower R&D in 2H?** **A:** The G&A decline mainly reflects the absence of certain management equity incentives that were present last year. AI did not have a significant impact in last year's P&L.It may become more material this year. **Q: Profitability of Xindong Town overseas? How are DAU and revenue trending?** **A:** Because Xindong Town is not UA-driven, its profitability is relatively healthy. For DAU, early additions are very large in this genre, and even high retention cannot fully offset DAU normalization.That is normal. We care more about long-term retention a few months out and whether updates can drive player re-engagement. In China, long-cycle ops are a major challenge.We are working on it and have set a floor for Intl. performance, but we still aim higher. **Q: How is Torchlight performing in the new seasons? Any strategic plan after acquiring the IP?** **A:** Recent Torchlight seasons have trended up, but that does not guarantee every future season will. The team has found its confidence and rhythm iteratively.We encourage exploration and do not mandate growth every season. Torchlight's core success comes from continuous quality upgrades and gameplay exploration season after season. That earned core player recognition and created a flywheel — quality gains drive player approval and revenue, which then fund a better next version.Owning the IP enables longer-term planning, whether further improving the current title or considering future sequels. **Q: What is the five-year direction? How do globalization and AI rank in strategic priority?** **A:** Globalization is a firm priority — our products will ship globally and build global brands. Over a five-year horizon, AI introduces uncertainty to the path.Without AI, we would keep compounding and building new titles step by step. AI may break the traditional path, and future content creation could look very different. We are unlikely to follow the traditional approach to R&D and will embrace change more proactively.For TapTap, AI is a major opportunity to help more developers at the production layer. **Q: What is the plan for TapTap overseas? How will you capture the opening of third-party iOS stores and payments?** **A:** TapTap overseas has been in a strategy reset for the past few years, and its priority was lowered. From this year, with Maker's eventual overseas rollout, the opportunity set should expand materially.But we will not copy the domestic model. Even if third-party store policies take effect, overseas cannot replicate the domestic TapTap–game bundling ecosystem. Third-party stores remain independent, and you cannot distribute the same package both in-store and off-store as in China.TapTap needs a new product matrix overseas — once Maker (PC), ADN, and other products are polished domestically, we will expand them abroad to interoperate well within Apple Store and Google Play ecosystems. **Q: Long-term vision for Xindong Town overseas? Any comparison to Roblox? Could it evolve into a more open platform?** **A:** The overlap with Roblox is still low, and with the current architecture we cannot reach Roblox's level. However, could Xindong Town evolve with AI and engines into a 'Town 2.0' product? We absolutely keep that option open and will try.The timing, cadence, and steps are not fully set, but the direction is. **Q: Who owns IP for games made with TapTap Maker? How do you think about game license approvals?** **A:** The game belongs to the creator. If TapTap Maker-provided assets are used, that portion belongs to us, but it does not affect the creator's ability to obtain a game license nor to monetize after approval.We will help outstanding creators apply for licenses and monetize. **Q: Can Xindong Town overseas reach top-tier profitability (40%–50%)? What is the impact of Apple's third-party policy?** **A:** Apple Store policies differ by region, and while rev-share seems to trend lower, the financial impact will not be dramatic. Third-party stores will not fundamentally change TapTap overseas.We will not copy the domestic model abroad; instead, we will build a new product matrix (Maker, PC, ADN), polish it domestically, then roll it out overseas to interoperate within existing Apple and Google ecosystems. **Q: Can Xindong Town's overseas margin exceed domestic?** **A:** We cannot target maintaining a fixed high margin. Our goal remains to maximize long-term net profit in absolute terms.We will invest when needed. **Q: How do you view substitution between AI models and applications? How will Maker's versions track model upgrades?** **A:** We hope base models iterate faster and better. TapTap Maker started in 4Q last year, and progress has been rapid thanks to model improvements.Whether users find it easier to build games depends on our AI features and on AI capability itself, which acts as a multiplier. Longer term, as LLMs and AI advance, game production may transform — whether via engines or world models, potentially with creation via a few prompts.One thing is certain: great content still requires creators. From TapTap's perspective, we must aggregate the world's best creators early and connect them deeply with players. The toolchain may change, but the key is to build and preserve this ecosystem on our platform starting now. **Q: What are the advantages of the new RO IP game vs. peers? What are the innovations?** **A:** We absolutely aim for an edge, which is why we keep investing in this IP. The new title is named 'Eternal Love 2' to signal that we are not just monetizing the IP, but building enduring value.We chose technological upgrades and new gameplay as the biggest differentiators. The title still needs time before launch, and our production approach is also evolving. We cannot guarantee outcomes, but we will proceed with greater boldness and conviction. **Q: How will you optimize TapTap Maker? Is the asset library lacking? Will you embed a 3D content engine?** **A:** We have a clear roadmap to improve art and assets, and this is a top priority. We are confident we can deliver meaningful upgrades here. **Q: How will Maker further lower barriers for mass-market creators? Will you consider template-based UGC?** **A:** Everything we do aims to cut dev costs. If creators know what they want but cannot deliver, we can help by building templates, optimizing tech, and enabling secondary development — all within reach. But the final step — turning a game into a truly fun hit — is inherently hard and reserved for a few. Maker does not raise the success rate of games; hit rates remain low.Our goal is to lower the creation barrier so more people can try. We cannot lift the percentage, but we can expand the denominator. In the past, only a few hundred companies and a few hundred people could become game producers; in the future, we hope thousands, tens of thousands, or millions can create games, letting the market surface true talent. **Q: As an older IP, how do you keep Torchlight fresh? What is the long-term plan after acquiring the IP?** **A:** The core remains continuous quality upgrades and gameplay exploration season after season, earning recognition from core players and creating a virtuous cycle — better quality drives player approval and revenue, which funds further improvements.Owning the IP enables longer-term planning, whether for improving the current title or exploring sequels, opening more possibilities. **Q: What is XD's publishing moat — superior localization, tailored creatives by region, or something else?** **A:** Publishing works best when tightly integrated with the product; ultimately, the product is the essence. For Xindong Town, publishing's biggest value is ensuring a smooth global rollout with minimal mistakes once the product is good — that is our edge.But beyond that, the product itself matters most. Publishing is like infrastructure — vital to build well. But the end result still depends most on the product. **Risk disclosure and disclaimer:**[**Dolphin Research Disclaimer and General Disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [XD INC (02400.HK)](https://longbridge.com/en/quote/02400.HK.md) - [Molson Coors Beverage Company (TAP.US)](https://longbridge.com/en/quote/TAP.US.md) - [Molson Coors Beverage Company (TAP.A.US)](https://longbridge.com/en/quote/TAP.A.US.md) ## Comments (1) - **撒马尔罕的金桃 · 2026-03-28T03:23:18.000Z**: What kind of bullshit is this?