Interpretation of the “Evergreen Games” questionnaire behind the strong reversal of losses in FY2024 (02400)

The Zhitong Finance App learned that after noon trading on March 29, Xindong (02400) released an impressive financial report since its launch in 2019 — in fiscal year 2024, the company's revenue was 5.01 billion yuan (RMB, same below), up 47.9% year on year; gross profit of 3.48 billion yuan, up 68.2%; net profit of 890 million yuan, reversing a loss of more than 65 million in fiscal year 2023.

The company's operating data for FY2024 also increased dramatically: the average MAU for online games also increased by 14.5% to 14.25 million, and the average MPU increased by 23.1% to 1.61 million; TapTap China's MAU increased 23% to 44.05 million. We have achieved simultaneous growth in the two major businesses of self-developed games and TapTap.

The results announcement issued the first dividend payment proposal since the company went public in Hong Kong: HK$0.4 per share.

Since Xindong announced in 2022 that it would strive to turn losses into profits, the company's annual losses have narrowed dramatically year by year, and not only successfully achieved the loss reversal target in 2024, but also recorded a significant increase in net profit. Looking ahead to 2025 to 2026, how to “maintain profits” and “strengthen business safety pads” is a trend that the outside world is focusing on.

This can be condensed into a “test paper”: How to do a good “evergreen game” with heartbeat?

Heartfelt: A company with “Evergreen Gaming” experience

Looking back at the financial reports from the 2019 listing prospectus to date, “Sausage Party” is the absolute “king” in the revenue contribution ranking of its games disclosed by the company, and has maintained the game that has contributed the most revenue to the company for nearly five consecutive years. Until the company's 2024 earnings report, “Let's Go Muffin” replaced “Sausage Party” and became the company's “King of Flowing Water” last year.

The top five most popular games revealed by the company in 2024 are: “Let's Go Muffin,” “Sausage Party,” “Sword of the Suzuran,” “Torchlight: Infinite,” and “Ragnarok M”.

“Sausage Party” has been around seven years since its launch, and the product life cycle is quite long. According to financial reports, even though this game ceased to be the company's strongest “running water king” last year, the company is still committed to investing resources in the subsequent development of the game: as a tactical competitive game, the company believes it still maintains a huge number of users and the potential to return to the growth trend in the Chinese market. To this end, in 2025, the company will continue to improve the game's development and distribution plans, hoping to help the game improve its level of performance.

According to reports, the new gameplay for “Sausage Party” is already under development and is expected to be launched within this year.

Also, it has been eight years since “Ragnarok M” went live. The original version of the game was launched in the Chinese market in April 2024 and in the Southeast Asian market in February 2025. After launch, the original version performed well and was well received by players. The company plans to launch the original version in other overseas markets one after another in 2025.

The above two are “evergreen games” that have been proven to be exciting. The industry generally believes that “Xindong Town”, which was launched by the company in the second half of last year, is most likely to become another “Evergreen Game” owned by Xindong.

“Heartfelt Town” is a business simulation game. Naturally, this category has the characteristics of a long life cycle. During the 2025 Spring Festival event, the game ranked 14th on the iOS bestseller list in the country, indicating that it has a stable and willing user base. The total number of downloads of the game on the Android version of the TapTap platform is close to 40 million, and the community's response has been good, which has led to the growth of the platform's users. In terms of content updates, “Heartbeat Town” regularly launches seasonal events and content updates to keep the game fresh, which is a key factor in maintaining the vitality of Evergreen Gaming. At the same time, the company may launch an overseas edition of “Heartfelt Town” to expand the potential for internationalization.

Since the company's “Torchlight: Infinite” was launched for two and a half years, it has gone through many seasons of refinement, management by domestic and international player communities, and also fully possesses the “Evergreen Gaming” gene for long-term healthy operation.

In fact, in the past two years, how to make an “evergreen game” has become an example for the domestic game industry. According to the general definition of the industry, “Evergreen Gaming” refers to games that can operate for a long time, continuously create value, and maintain a high level of user activity. Under the reality that new game promotion costs are high and the player base is more difficult to break through, “Evergreen Gaming”, which already has a broad user base, has significant advantages over brand reputation recognition, user activation and recall, etc., compared to brand new IP games.

For listed game companies, “Evergreen Gaming” can also help provide stable and predictable long-term income, reduce operating risks, and increase the revenue cushion for the game business.

Also, according to financial reports, as of the end of 2024, the company also has two online games in the development stage. It is generally believed that the two games under development are “Ether: Relaunch Day” and “Ragnarok RO: Guarding Eternal Love 2.” Both games have been officially announced and are expected to be publicly tested within 2025.

This year, the exciting buyout game product line will also launch a number of well-known boutique games at home and abroad: “Total War Simulator,” “Diver Dave,” and “Daughter of the Volcano.” Although the revenue that these works can contribute to the company is definitely not high, they have helped launch the “Heartbeat” brand's reputation in the player community, as well as TapTap's exclusive high-quality buyout game product line on Android, and have further expanded the diversity of the platform's content ecosystem.

The explosive “big number theorem” will support TapTap's continued growth

For TapTap, 2024 was a year to reap the dividends of popular games on the Internet: “Phrigos,” “Happy Fishing Master,” and “Heartfelt Town” came out one after another last year. With its ability to distribute these games across the network, TapTap recorded a considerable increase in active users and platform revenue.

The Chinese version of TapTap MAU swept away the decline in 2023 and rebounded to 44.05 million; annual revenue of 1.58 billion yuan, an increase of 21.6% over the previous year. It is worth mentioning that while revenue continues to grow significantly, the gross margin of the TapTap business remains at a high level of 84%.

According to the company's financial report, the year-on-year increase in the MAU of the Chinese version of TapTap last year was mainly due to the launch of some popular mobile game titles in the Chinese market in 2024, and some games reached exclusive or deep cooperation with TapTap; the company's self-developed game “Heart Town” was exclusively released on TapTap and brought in new users; the company increased TapTap's marketing activities and introduced new marketing and promotion methods. At the same time, TapTap strengthened support for premium pay-to-download games last year, allowing these games to be displayed even more.

At the TapTap developer salon in August of last year, Xindong CEO Huang Yimeng said that TapTap now has the ability to help exclusive games cover the entire network on social media platforms such as Douyin, Kuaishou, and Xiaohongshu, so that game products have more exposure outside the site. Benefiting from this approach are not only third-party games such as “Let's Go Muffin”, “Heartwarming Town”, “Phigros”, and “Happy Fishing Master”, etc., but also gained a large number of new users for TapTap through the help of TapTap.

” TapTap now has publicity and promotion capabilities covering the entire network outside the site, which can help all developers. In the future, we hope to expand cooperation and attract more developers to try it out. “Huang Yimeng said at the time.

So, in 2025, will TapTap's network-wide advertising capabilities still “catch big fish”?

According to observations from the TapTap team, as long as the latest hits in the domestic mobile game industry meet the “big number theorem” — that is, if the number of newly launched games is sufficient, and the “hit rate” remains basically the same, then TapTap will be able to eat popular games and replicate the results of 2024. The objective conditions to support this logic are all in place:

First, the pace of distribution of domestic game versions is already very stable. In the past 25 months of March, more than 130 game editions were even released, breaking the recent high number of monthly edition numbers distributed. This means that the version number is no longer the main “card point” in the domestic game market, and the supply-side output of games is becoming more stable and healthy;

Second, TapTap's related teams have also settled down an effective style of play during the online release of various games in 2024, and are ready to “catch the storm” at any time.

Beyond games: AI exploration reserves a window for a second growth curve

The exciting financial report also revealed a detail: the number of R&D personnel dropped slightly from 1,031 at the end of 2023 to 993 at the end of 2024. This is the year with the fewest annual increase or decrease in the number of R&D personnel in the company in recent years. R&D has stabilized, and there are no major ups and downs. This is a rational arrangement based on the company's current and ongoing product line.

It is worth noting that the company has intensified its exploration of the AI industry in the past two years.

According to reports, Xindong is the first listed game company in China to fully integrate AI into the game development workflow.

In the art segment, the company originally developed AI I drawing plug-ins to help designers polish the details of art images more efficiently; for training project-specific character AI models, designers use AI tools to quickly generate early ideas according to product development requirements; in terms of texture generation, motion capture optimization, etc., AI also significantly reduced the repetitive workload of human participation, further shortening the R&D cycle; through comprehensive application of AI, the overall efficiency of the art department was increased by more than 50%.

In the text translation process, it used to be expensive to rely on an outsourced translation company. With the introduction of AI, Xindong has drastically reduced translation expenses on the premise that the overall quality of translation is stable. In addition, the company has also actively implemented AI-assisted code programming.

TapTap has a flexible and highly talent-dense AI cutting-edge technology research team. The research result “Lightning Attention” was published in the top international machine learning conference “ICML” and was quoted by Minimax, a well-known domestic model company.

TapTap AI, the industry's first vertical AI game knowledge quiz product, was also launched last year. The product has been officially launched through filing, making up for the shortcomings of the general language model that updates information slowly, has many “illusions”, and relatively weak recognition of users' questioning intentions in games and other fields of knowledge.

It can be said that in addition to integrating AI technology into the company's existing business, the company has also flexibly deployed research resources in the more basic AI field as a “stepping stone” to keep track of cutting-edge technology and discuss with the AI industry.

“The boat has passed 10,000 times over the mountains” is the image that the heart is reflected in the 2024 financial report. But that doesn't mean you can rest easy from now on. How to actually run the old and new “Evergreen Games” and how to arrange a longer-term pace for new game projects will be an important proposition for the company to continue to grow this year and next.

Fortunately, after experiencing a hiatus from 2021 to 2023, Heartbeat, from management, team to business, has shown a new, more robust and sustainable climate since its launch.