XD Inc. provided group earnings guidance for the year ended December 31, 2020. The board of directors of the company inform the shareholders of the company and potential investors that, based on the preliminary assessment of the unaudited consolidated management accounts of the Group for the year ended December 31, 2020, the Group is expected to record a net profit of approximately RMB 30.0 million to RMB 60.0 million for the year ended December 31, 2020, down 94.2% to 88.3% from RMB 513.4 million recorded for the year ended December 31, 2019. Such expected decrease in net profit is mainly attributable to a significant increase of approximately RMB 330.0 million to RMB 360.0 million in research and development expenses for fiscal year 2020 as compared to fiscal year 2019. This was primarily due to the Group's strategy to enhance game development capabilities and TapTap's user experience through recruitment of more research and development personnel, leading to an increase of the total number of the research and development personnel from 806 as of December 31, 2019 to 1,355 as of December 31, 2020, and the increased levels of employee benefits to incentivise the employees of the Group; a decrease of approximately RMB 230.0 million to RMB 260.0 million in gross profit for fiscal year 2020 as compared to fiscal year 2019. While the total revenue of the Group for fiscal year 2020 remained stable as compared to fiscal year 2019, the decrease in gross profit was primarily due to the increase in the contribution ratio from licensed games of the Group to the total game operating revenues of the Group, as licensed games generally have lower gross margin than self-developed games; and partially offset by the decreased selling and marketing expense, as launched fewer new games in fiscal year 2020 as compared to fiscal year 2019. The Board considers that, while this may have negative impact on the net profit of the Group in the short-term, the Group's strategy to continuously invest in talents in game development and information technology is in the interest of the Group in the long-term and the Board remains optimistic about the long-term development and prospects of the Group.