CLPS Incorporation Reports Financial Results for the First Half of Fiscal Year 2024
- Revenue from the United States surged by 92.7% to $1.9 million.
- Revenue outside mainland China increased by 25.4% to $9.0 million.
- Revenue from the automotive area grew by 10.7% to $7.2 million.
- Total operating expenses decreased by 2.6% to $16.7 million.
- Non-GAAP operating expenses decreased by 8.2% to $13.9 million.
- Net cash provided by operating activities was $13.1 million.
- CLPS acquired Purple Potato Finance and College of Allied Educators Pte. Ltd.
- CLPS opened a subsidiary in Canada and expanded business in North America.
- Revenue from Singapore increased by 15.9% year-over-year.
- CLPS declared a second special cash dividend of $0.10 per share in November 2023.
- Net loss was $1.0 million in the first half of fiscal 2024.
- Non-GAAP net income was $1.7 million in the same period.
- CLPS had cash and cash equivalents of $35.1 million as of December 31, 2023.
- Revenues decreased by $5.0 million, or 6.5%, to $71.8 million.
- Net loss was reported in the first half of fiscal 2024.
- Non-GAAP net income decreased to $1.2 million.
- Revenue from IT consulting services and customized IT solution services declined.
- Operating loss was $0.9 million in the first half of fiscal 2024.
Insights
The unaudited financial results of CLPS Incorporation for the first half of fiscal year 2024 reveal a complex picture of the company's performance. Key financial indicators such as a 6.5% decrease in overall revenue and a net loss of $1.0 million contrast with positive developments like a 92.7% increase in U.S. revenue and a 25.4% increase in revenue generated outside mainland China. This suggests a strategic pivot towards international markets, which could be a response to the softening demand in domestic IT services. The reported decline in operating expenses by 2.6% indicates effective cost management strategies in place, which is essential for maintaining profitability amid revenue challenges.
Additionally, the company's emphasis on generating positive cash flow, marked by the fifth consecutive period of positive cash flow from operations, is a reassuring sign for liquidity and operational efficiency. The declaration of a special cash dividend may reflect a commitment to shareholder value, despite the financial downturn. However, investors should closely monitor the company's ability to sustain dividends in light of the reported net loss and the potential for continued economic headwinds.
CLPS's strategic moves, such as the acquisitions and global expansion, particularly in the United States and Southeast Asia, indicate a deliberate shift to diversify the company's portfolio and reduce reliance on its traditional markets. The substantial revenue growth in the U.S. and the entry into new markets like Canada and the Philippines could be seen as a proactive response to the temporary reduction in demand from established clients in the banking and e-commerce sectors. This diversification strategy could potentially mitigate risks associated with market-specific downturns and currency fluctuations.
However, the significant decrease in revenue from customized IT solution services raises questions about the company's competitive edge in innovation and the effectiveness of its R&D realignment. The reported increase in revenue from IT product sales, though, could indicate a successful pivot towards new product offerings. As CLPS continues to invest in advanced technologies like AI-generated content and quantitative trading systems, it will be critical to assess how these innovations translate into marketable products and services that contribute to revenue growth.
The economic slowdown and exchange rate fluctuation between the RMB and the U.S. dollar have presented both challenges and learning opportunities for CLPS. The company's experience navigating these conditions is indicative of broader economic trends affecting multinational corporations. The increase in compensation expenses due to the demand for IT professionals reflects a global trend in the technology sector where talent scarcity leads to wage inflation.
CLPS's Talent Creation and Development Programs may offer a sustainable solution to this issue by internally cultivating the necessary skills and reducing dependence on the competitive labor market. This approach, if successful, could serve as a model for other companies facing similar challenges. In the long term, the ability to control labor costs while maintaining a high level of expertise will be a critical factor in CLPS's ability to compete and maintain profitability in a global IT market.
During this period, CLPS navigated a challenging global economic landscape due to factors such as economic slowdown and the impact of exchange rate fluctuation between the RMB and the
Observing a temporary reduction in demand for certain IT services from established clients due to budget adjustments, particularly in banking and e-commerce areas, CLPS offset revenue challenges by strategically acquiring new clients, innovating product development, diversifying revenue streams, and implementing proactive market solutions. Increased compensation expenses linked to the growing demand for IT professionals were effectively managed through the Company's Talent Creation Program ("TCP") and Talent Development Program ("TDP"). These programs seamlessly blend education, training, and service delivery, not only mitigating the impact of rising manpower costs but also reinforcing CLPS's commitment to nurturing top talents.
Through consistent execution of its global expansion strategy, coupled with investments in advanced technology, extensive research, and a deep understanding of client needs, CLPS has built a strong industry reputation, enhanced its competitiveness, and solidified its bargaining power over the years.
First Half of Fiscal 2024 Highlights (all results compared to the six months ended December 31, 2022)
- Revenue from
the United States increased by92.7% to$1.9 million $1.0 million - Revenue generated outside of mainland
China increased by25.4% to$9.0 million $7.2 million - Revenue from automotive area increased by
10.7% to$7.2 million $6.5 million - Total operating expenses decreased by
2.6% to$16.7 million $17.1 million - Non-GAAP operating expenses[1] decreased by
8.2% to$13.9 million $15.2 million - Net cash provided by operating activities was
$13.1 million
Mr. Raymond Lin, Chief Executive Officer of CLPS, commented, "Despite facing challenges in the first half of fiscal 2024, I am pleased to share several key developments that demonstrate our commitment to building a strong foundation for future growth.
Our M&A strategy, exemplified by the acquisition of Purple Potato Finance, has bolstered our overseas credit card business. Similarly, the January 2024 acquisition of College of Allied Educators Pte. Ltd. in
Further strengthening our global presence, we intensified our business efforts in
Moreover, we remain dedicated to building a sustainable future by actively nurturing a positive corporate culture through leadership training, university collaborations, strategic partnerships, and enriched talent development opportunities.
We continue to champion innovation, showcasing our commitment to staying at the forefront of technology with the launch of an AI-generated content (AIGC) solution and an innovative quantitative trading system. Our active participation in industry events further reinforces our position on staying ahead and engages with the broader tech community.
With confidence, we believe these strategic decisions position CLPS for long-term success. We remain dedicated to transparency, innovation, and creating sustainable value for all stakeholders."
Ms. Rui Yang, Chief Financial Officer of CLPS, commented, "We have managed to achieve noteworthy financial results during this period. We actively pursued and secured new revenue streams, including initial sales of IT products. Our global expansion strategy and cost optimization efforts led to
Further demonstrating our commitment to shareholder value, we declared a second special cash dividend of
First Half of Fiscal Year 2024 Financial Results
Revenues
In the first half of fiscal 2024, revenues decreased by
Revenues by Service
- Revenue from IT consulting services decreased by
$3.3 million 4.6% , to$69.5 million $72.8 million 96.8% of total revenue, compared to94.9% in the prior year period. The decrease was primarily due to existing clients' increased focus on budget optimization leading to a decrease in demand. - Revenue from customized IT solution services decreased by
$2.0 million 61.5% , to$1.2 million $3.2 million 1.7% of total revenue, compared to4.1% in the prior year period. The decrease was primarily due to existing clients' increased focus on budget optimization leading to a decrease in demand. - Revenue from other services increased by
$0.2 million 37.5% , to$1.0 million $0.8 million 1.5% of total revenue, compared to1.0% in the prior year period. The increase was primarily due to the initial revenue generated from IT product sales during this reporting period.
Revenues by Operational Areas
- Revenue from the banking area decreased by
$3.6 million 11.2% , to$28.6 million $32.2 million 39.9% and42.0% of total revenues in the first half of fiscal 2024 and 2023, respectively. - Revenue from the wealth management area decreased by
$0.2 million 1.1% , to$18.6 million $18.8 million 25.9% and24.5% of total revenues in the first half of fiscal 2024 and 2023, respectively. - Revenue from the e-Commerce area decreased by
$2.7 million 20.2% , to$11.0 million $13.7 million 15.3% and17.9% of total revenues in the first half of fiscal 2024 and 2023, respectively. - Revenue from the automotive area increased by
$0.7 million 10.7% , to$7.2 million $6.5 million 10.1% and8.5% of total revenues in the first half of fiscal 2024 and 2023, respectively.
Revenues by Geography
Revenue generated outside of the mainland
Gross Profit
Gross profit was
Operating Expenses
Selling and marketing expenses increased by
Research and development expenses decreased by
General and administrative expenses increased by
Operating (Loss) Income
Operating loss was
Other Income and Expenses
Total other income, net of other expenses was
Provision for Income Taxes
Provision for income taxes increased by
Net (Loss) Income
Net loss was
Non-GAAP net income[4] was
Net loss attributable to CLPS Incorporation's shareholders in the first half of fiscal 2024 was
Non-GAAP net income attributable to CLPS Incorporation's shareholders[5] was
Cash Flow
As of December 31, 2023, the Company had cash and cash equivalents of
Net cash provided by operating activities was approximately
Financial Outlook
Undeterred by the short-term challenges, we remain confident about our long-term business growth. For fiscal year 2024, the Company expects, considering our financial numbers could be affected by the floating exchange rate, and absent material acquisitions or non-recurring transactions, total sales growth was adjusted in the range of approximately
This forecast reflects the Company's current and preliminary views, which are subject to change and are subject to risks and uncertainties, including, but not limited to various risks and uncertainties facing the Company's business and operations as identified in its public filings.
Exchange Rate
The balance sheet amounts with the exception of equity as of December 31, 2023, were translated at
About CLPS Incorporation
Headquartered in
Forward-Looking Statements
Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to the Company's beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company's control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All such statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties related to the Company's financial and operational performance in the first half of fiscal year 2024, its expectations of the Company's future performance, its preliminary outlook and guidance offered in this presentation, as well as the risks and uncertainties described in the Company's most recently filed SEC reports and filings. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.
Use of Non-GAAP Financial Measures
The consolidated financial information is prepared in conformity with accounting principles generally accepted in the
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. For more information on these non-GAAP financial measures, please see the table captioned "Unaudited Reconciliations of Non-GAAP and GAAP Results" near the end of this release.
Contact:
CLPS Incorporation
Rhon Galicha
Investor Relations Office
Phone: +86-182-2192-5378
Email: ir@clpsglobal.com
[1] Non-GAAP operating expenses is a non-GAAP financial measure, which is defined as operating expenses excluding share-based compensation expenses. Please refer to the section titled "Unaudited Reconciliation of Non-GAAP and GAAP Results" for details. |
[2] Non-GAAP selling and marketing expenses is a non-GAAP financial measure, which is defined as selling and marketing expenses excluding share-based compensation expenses. Please refer to the section titled "Unaudited Reconciliation of Non-GAAP and GAAP Results" for details. |
[3] Non-GAAP general and administrative expenses is a non-GAAP financial measure, which is defined as general and administrative expenses excluding share-based compensation expenses. Please refer to the section titled "Unaudited Reconciliation of Non-GAAP and GAAP Results" for details. |
[4] Non-GAAP net income is a non-GAAP financial measure, which is defined as net income excluding share-based compensation expenses. Please refer to the section titled "Unaudited Reconciliation of Non-GAAP and GAAP Results" for details. |
[5] Non-GAAP net income attributable to CLPS Incorporation's shareholders is a non-GAAP financial measure, which is defined as net income attributable to CLPS Incorporation's shareholders excluding share-based compensation expenses. Please refer to the section titled "Unaudited Reconciliation of Non-GAAP and GAAP Results" for details. |
CLPS INCORPORATION | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Amounts in | ||||||||
As of | ||||||||
December 31, 2023 (Unaudited) | June 30, 2023 (Audited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 35,108,870 | $ | 22,214,029 | ||||
Restricted cash | 89,539 | 87,604 | ||||||
Accounts receivable, net | 39,092,817 | 48,515,467 | ||||||
Prepayments, deposits and other assets, net | 3,279,971 | 1,665,736 | ||||||
Amounts due from related parties | 465,582 | 391,271 | ||||||
Total Current Assets | $ | 78,036,779 | $ | 72,874,107 | ||||
Non-Current assets: | ||||||||
Property and equipment, net | 21,404,190 | 20,112,305 | ||||||
Intangible assets, net | 689,783 | 726,175 | ||||||
Operating lease right-of-use assets | 3,006,854 | 815,324 | ||||||
Long-term investments | 612,843 | 456,598 | ||||||
Prepayments, deposits and other assets, net | 1,614,426 | 252,656 | ||||||
Amounts due from related parties | 422,541 | - | ||||||
Deferred tax assets, net | 115,975 | 81,899 | ||||||
Total Assets | $ | 105,903,391 | $ | 95,319,064 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Bank loans | $ | 15,699,530 | $ | 10,554,617 | ||||
Accounts payable | 925,425 | 690,035 | ||||||
Accrued expenses and other current liabilities | 379,474 | 324,021 | ||||||
Tax payables | 1,860,960 | 2,503,375 | ||||||
Contract liabilities | 1,189,953 | 918,470 | ||||||
Salaries and benefits payable | 13,228,752 | 10,586,239 | ||||||
Operating lease liabilities | 1,230,907 | 712,302 | ||||||
Amount due to related parties | 25,344 | 24,889 | ||||||
Total Current Liabilities | $ | 34,540,345 | $ | 26,313,948 | ||||
Non-Current liabilities: | ||||||||
Operating lease liabilities | 1,906,298 | 104,114 | ||||||
Deferred tax liabilities | 111,057 | 185,382 | ||||||
Unrecognized tax benefit | 2,843,667 | 2,320,918 | ||||||
Other non-current liabilities | 904,793 | 885,901 | ||||||
TOTAL LIABILITIES | $ | 40,306,160 | $ | 29,810,263 | ||||
Commitments and Contingencies | ||||||||
Shareholders' Equity | ||||||||
Common stock, | 2,562 | 2,365 | ||||||
Additional paid-in capital | 60,914,080 | 58,183,383 | ||||||
Statutory reserves | 5,517,142 | 5,356,828 | ||||||
Retained earnings | 826,631 | 5,029,021 | ||||||
Accumulated other comprehensive losses | (3,116,935) | (3,990,594) | ||||||
Total CLPS Incorporation's Shareholders' Equity | 64,143,480 | 64,581,003 | ||||||
Noncontrolling Interests | 1,453,751 | 927,798 | ||||||
Total Shareholders' Equity | 65,597,231 | 65,508,801 | ||||||
Total Liabilities and Shareholders' Equity | $ | 105,903,391 | $ | 95,319,064 | ||||
CLPS INCORPORATION | ||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS | ||||||
OF INCOME AND COMPREHENSIVE INCOME | ||||||
(Amounts in | ||||||
For the six months ended | ||||||
December 31, | ||||||
2023 | 2022 | |||||
Revenues | $ | 71,774,201 | $ | 76,760,811 | ||
Less: Cost of revenues (note 1) | (56,024,043) | (58,299,928) | ||||
Gross profit | 15,750,158 | 18,460,883 | ||||
Operating income (expenses): | ||||||
Selling and marketing expenses (note 1) | 2,724,226 | 2,684,075 | ||||
Research and development expenses | 3,194,918 | 4,359,214 | ||||
General and administrative expenses (note 1) | 11,184,626 | 10,694,588 | ||||
Subsidies and other operating income | (437,598) | (620,702) | ||||
Total operating expenses | 16,666,172 | 17,117,175 | ||||
(Loss) income from operations | (916,014) | 1,343,708 | ||||
Other income | 308,017 | 399,917 | ||||
Other expenses | (198,043) | (183,695) | ||||
(Loss) income before income tax and share of income (loss) in equity | (806,040) | 1,559,930 | ||||
Provision for income taxes | 337,563 | 185,196 | ||||
(Loss) income before share of income in equity investees | (1,143,603) | 1,374,734 | ||||
Share of income in equity investees, net of tax | 150,148 | 22,577 | ||||
Net (loss) income | (993,455) | 1,397,311 | ||||
Less: Net income attributable to noncontrolling interests | 494,080 | 129,881 | ||||
Net (loss) income attributable to CLPS Incorporation's | $ | (1,487,535) | $ | 1,267,430 | ||
Other comprehensive income (loss) | ||||||
Foreign currency translation income (loss) | $ | 905,532 | $ | (746,569) | ||
Less: foreign currency translation income (loss) attributable to | 31,873 | (35,064) | ||||
Other comprehensive income (loss) attributable to CLPS | $ | 873,659 | $ | (711,505) | ||
Comprehensive (loss) income attributable to | ||||||
CLPS Incorporation's shareholders | $ | (613,876) | $ | 555,925 | ||
Comprehensive income attributable to noncontrolling interests | 525,953 | 94,817 | ||||
Comprehensive (loss) income | $ | (87,923) | $ | 650,742 | ||
Basic (loss) earnings per common share | $ | (0.06) | $ | 0.05 | ||
Weighted average number of share outstanding – basic | 24,814,349 | 23,626,122 | ||||
Diluted (loss) earnings per common share | $ | (0.06) | $ | 0.05 | ||
Weighted average number of share outstanding – diluted | 24,814,349 | 23,643,457 | ||||
Note: | ||||||
(1) Includes share-based compensation expenses as follows: | ||||||
Cost of revenues | 5,809 | 11,071 | ||||
Selling and marketing expenses | 192,947 | 60,091 | ||||
General and administrative expenses | 2,532,137 | 1,871,910 | ||||
2,730,893 | 1,943,072 | |||||
CLPS INCORPORATION | ||||||||||||
UNAUDITED RECONCILIATION OF NON-GAAP AND GAAP RESULTS | ||||||||||||
(Amounts in | ||||||||||||
For the six months ended December 31, | ||||||||||||
2023 | 2022 | |||||||||||
Cost of revenues | $ | (56,024,043) | $ | (58,299,928) | ||||||||
Less: share-based compensation expenses | (5,809) | (11,071) | ||||||||||
Non-GAAP cost of revenues | $ | (56,018,234) | $ | (58,288,857) | ||||||||
Selling and marketing expenses | $ | (2,724,226) | $ | (2,684,075) | ||||||||
Less: share-based compensation expenses | (192,947) | (60,091) | ||||||||||
Non-GAAP selling and marketing | $ | (2,531,279) | $ | (2,623,984) | ||||||||
General and administrative expenses | $ | (11,184,626) | $ | (10,694,588) | ||||||||
Less: share-based compensation expenses | (2,532,137) | (1,871,910) | ||||||||||
Non-GAAP general and administrative | $ |
(8,652,489) | $ |
(8,822,678) | ||||||||
Operating (loss) income | $ | (916,014) | $ | 1,343,708 | ||||||||
Add: share-based compensation expenses | 2,730,893 | 1,943,072 | ||||||||||
Non-GAAP operating income | $ | 1,814,879 | $ | 3,286,780 | ||||||||
Operating Margin | (1.3) % | 1.8 % | ||||||||||
Add: share-based compensation expenses | 3.8 % | 2.5 % | ||||||||||
Non-GAAP operating margin | 2.5 % | 4.3 % | ||||||||||
Net (loss) income | $ | (993,455) | $ | 1,397,311 | ||||||||
Add: share-based compensation expenses | 2,730,893 | 1,943,072 | ||||||||||
Non-GAAP net income | $ | 1,737,438 | $ | 3,340,383 | ||||||||
Net (loss) income attributable to CLPS | $ | (1,487,535) | $ | 1,267,430 | ||||||||
Add: share-based compensation expenses | 2,730,893 | 1,943,072 | ||||||||||
Non-GAAP net income attributable to | $ | 1,243,358 | $ | 3,210,502 | ||||||||
Weighted average number of share | 24,814,349 | 23,626,122 | ||||||||||
GAAP basic (loss) earnings per common | $ | (0.06) | $ | 0.05 | ||||||||
Add: share-based compensation expenses | 0.11 | 0.09 | ||||||||||
Non-GAAP basic earnings per common | $ | 0.05 | $ | 0.14 | ||||||||
Weighted average number of share | 24,814,349 | 23,643,457 | ||||||||||
Weighted average number of share | 24,814,477 | 23,643,457 | ||||||||||
GAAP diluted (loss) earnings per common | $ | (0.06) | $ | 0.05 | ||||||||
Add: share-based compensation expenses | 0.11 | 0.09 | ||||||||||
Non-GAAP diluted earnings per common | $ | 0.05 | $ | 0.14 | ||||||||
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SOURCE CLPS
FAQ
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