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CLPS Incorporation Reports Financial Results for the Fourth Quarter and Full Year of 2018

SHANGHAI, Sept. 25, 2018 /PRNewswire/ -- CLPS Incorporation (the "Company" or "CLPS") (Nasdaq: CLPS), a leading information technology ("IT") consulting and solutions service provider focusing on the banking, insurance and financial sectors in China and globally, today announced its financial results for the fourth fiscal quarter ended June 30, 2018 and fiscal year of 2018.

Mr. Raymond Lin, Chief Executive Officer of CLPS, commented, "We ended fiscal year 2018 with a strong fourth quarter. Thanks to the healthy performance of our IT consulting segment, our top line grew more than 50% year over year. This driver also helped our full year performance, increasing our full year revenue over the prior year."

"2018 marked an important year in CLPS's corporate history," Mr. Lin continued. "We delivered on our strategy of growing revenue from existing clients and added more than 20 well-known global corporate clients based in the PRC and overseas to our client list. We continued building strategic alliances and acquisitions by successfully completing the acquisition and integration of Judge China, a growing IT and engineering talent solutions provider in China. We pushed our research and development investment to deepen our domain expertise and develop specific solutions for targeted industry verticals. We added more than 400 professionals to our world-class talent pool and continued to deliver our industry-leading Talent Creation Program and Talent Development Program."

"Looking ahead, we continue onto the next chapter of our growth by expanding and deepening our service offerings. Horizontally, we intend to attract new clients in existing and new geographies in our core industries. Vertically, we plan to enhance our existing solutions and develop new ones with in-demand technologies such as big data, block chain, automation, and the cloud. We will continue to remain committed to our employees and to provide them with the tools to succeed and service our customers. As we continue to expand our product offerings, grow globally, and enlarge our talent pool, we believe that we are well-positioned to leverage our deep sector expertise to capture the growth opportunities ahead and maintain long-term, sustainable shareholder value," concluded Mr. Lin.

Fourth Quarter of 2018 Financial Highlights

For the Three Months Ended June 30

(USD)

2018


2017


Change

Revenue  

13,855,300


9,170,578


4,684,722

IT Consulting Services  

13,319,638


8,631,524


4,688,114

Customized IT Solution Services  

463,923


498,169


(34,246)

Other  

71,739


40,885


30,854

Gross Profit  

4,839,532


3,945,783


893,749

Gross Margin  

34.9%


43.0%


(8.1%)

Operating Profits  

726,599


846,249


(119,650)

Operating Margin  

5.2%


9.2%


(4.0%)

Net Income Attributable to CLPS Incorporation

727,996


782,572


(54,576)

EPS  

0.06


0.07


(0.01)

 

  • Revenues increased by 51.1% to $13.9 million for the three months ended June 30, 2018, from $9.2 million for the same period of last year, mainly due to an increase in revenues from IT consulting services.
  • Gross profit increased by 22.7% to $4.8 million for the three months ended June 30, 2018, from $3.9 million for the same period of last year. Gross margin decreased to 34.9% from 43.0% for the same period of last year.
  • Net income attributable to the Company decreased by 7.0% to $0.7 million for the three months ended June 30, 2018.
  • Basic and diluted earnings per share were $0.06 for the three months ended June 30, 2018, compared with $0.07 per share for the same period of last year.

Fourth Quarter of 2018 Financial Results

Revenues

For the fourth quarter of 2018, revenues increased by $4.7 million, or 51.1%, to $13.9 million from $9.2 million for the same period of last year. This increase in revenue was mainly due to an increase in revenue from IT consulting services.

Revenue from IT consulting services increased by $4.7 million, or 54.3%, to $13.3 million and accounted for 96.1% of total revenue for fourth quarter of 2018 from $8.6 million, or 94.1% of total revenue, for the same period of last year. The increase was primarily due to the increasing demand for IT consulting service from banks and other financial institutions. For the three months ended June 30, 2018 and 2017, 46.9% and 52.6% of IT consulting services revenue were from international banks, respectively.

Revenue from customized IT solution services decreased by $0.04 million, or 6.9%, to $0.46 million for the fourth quarter of 2018 from $0.50 million for the same period of last year. During the fourth quarter of 2018, revenue from other services increased by $0.03 million to $0.07 million over the fourth quarter of 2018.  The year-over-year decrease in IT solution services was primarily due to the fact that some projects are currently in progress and have not been completed as of yet, and therefore revenue has not yet been recognized. The year-over-year increase in other services was mainly due to the increasing demand from existing customers in the fourth quarter of 2018.

Gross Profit and Gross Margin

Gross profit increased by $0.9 million, or 22.7%, to $4.8 million for the fourth quarter of 2018 from $3.9 million for the same period of last year. Gross margin decreased to 34.9% for the fourth quarter of 2018 compared to 43.0% for the same period of last year. The decrease in gross margin was primarily due to the lower gross margin of the new projects.

Operating Expenses

Selling and marketing expenses increased by $0.1 million, or 24.9%, to $0.6 million for the fourth quarter of 2018 from $0.5 million for the same period of last year. The increase was primarily due to the expansion of the pre-sales and marketing teams in Shanghai and Dalian in China to support operations.

Research and development expenses increased by $1.0 million, or 102.4%, to $2.0 million for the fourth quarter of 2018 from $1.0 million for the same period of last year. The increase was attributable to an increase in the number of research projects and the related employee headcount.

General and administrative expenses increased by $0.1 million, or 5.4%, to $1.7 million for the fourth quarter of 2018 from $1.6 million for the same period of last year. The increase was primarily due to personnel increases in support sectors.

Operating Income

Operating income decreased by $0.3 million, or 42.4%, to $0.5 million for the fourth quarter of 2018 from $0.8 million for the same period of last year. Operating margin was 3.4% for the fourth quarter of 2018, as compared to 8.8% for the same period of last year.

Other Income and Expenses

Subsidies and other income increased to $0.3 million for the fourth quarter of 2018, from $0.1 million for the same period of last year.

Benefit from Income Taxes

Income tax benefit decreased by $0.03 million to $0.07 million for the fourth quarter of 2018 from $0.1 million for the same period of last year, mainly due to the Company's recognition of deferred tax assets as a result of the net operating losses carry forward for certain of the Company's subsidiaries.

Net Income and EPS

Net income decreased by $0.2 million, or 16.5%, to $0.8 million for the fourth quarter of 2018 from $1.0 million for the same period of last year. The decrease in net income was due to the increase in R&D expense. After the deduction of non-controlling interests, net income attributable to shareholders for the fourth quarter of 2018 was $0.7 million, or $0.06 per basic and diluted share. This is compared to net income attributable to shareholders of $0.8 million, or $0.07 per basic and diluted share, for the fourth quarter of 2017.

Fiscal Year 2018 Financial Highlights

For the Fiscal Years Ended June 30

(USD)

2018


2017


Change

Revenue  

48,938,593


31,361,976


17,576,617

IT Consulting Services  

47,159,651


29,146,470


18,013,181

Customized IT Solution Services  

1,634,100


1,846,423


(212,323)

Other  

144,842


369,083


(224,241)

Gross Profit  

17,661,338


12,692,164


4,969,174

Gross Margin  

36.1%


40.5%


(4.4%)

Operating Profits  

2,602,770


2,102,811


499,959

Operating Margin  

5.3%


6.7%


(1.4%)

Net Income Attributable to CLPS Incorporation

2,434,463


2,047,445


387,018

EPS  

0.21


0.18


0.03

 

  • Revenues increased by 56.0% to $48.9 million for the year ended June 30, 2018, from $31.4 million for the year ended June 30, 2017, mainly due to an increase in revenue from IT consulting services for clients in the financial industry.
  • Gross profit increased by 39.2% to $17.7 million for the year ended June 30, 2018, from $12.7 million for the same period of last year. Gross margin decreased year over year to 36.1% from 40.5%.
  • Net income attributable to the Company increased year over year by 18.9% to $2.4 million for the year ended June 30, 2018.
  • Basic and diluted earnings per share were $0.21 for the year ended June 30, 2018, compared with $0.18 per share for the year ended June 30, 2017.

Fiscal Year 2018 Financial Results

Revenues

For the year ended June 30, 2018, revenues increased by $17.6 million, or 56.0%, to $48.9 million from $31.4 million for the same period of last year. This increase in revenue was mainly due to an increase in revenue from IT consulting services.

Revenue from IT consulting services increased by $18.0 million, or 61.8%, to $47.2 million and accounted for 96.4% of total revenue for the year ended June 30, 2018, from $29.1 million, or 92.9% of total revenue, for the same period of last year. The increase was primarily due to the increasing demand for IT consulting services from banks and other financial institutions. For the year ended June 30, 2018 and 2017, 46.8% and 54.0% of IT consulting services revenue were from international banks, respectively.

Revenue from customized IT solution services decreased by $0.2 million, or 11.5%, to $1.6 million for the year ended June 30, 2018 from $1.8 million for the same period of last year. During the year ended June 30, 2018, revenue from other services decreased by $0.2 million to $0.1 million over the year ended June 30, 2017. The year-over-year decrease in IT solution services was primarily due to some ongoing projects for which revenue has not yet been recognized. The year-over-year decrease in other services was due to one client's decreased demand in the fiscal year 2018.

Gross Profit and Gross Margin

Gross profit increased by $5.0 million, or 39.2%, to $17.7 million for the year ended June 30, 2018, from $12.7 million for the same period of last year. Gross margin decreased to 36.1% for the year ended June 30, 2018, compared to 40.5% for the same period of last year. The decrease in gross margin was primarily due to the lower gross margin of new projects.

Operating Expenses

Selling and marketing expenses increased by $1.0 million, or 84.5%, to $2.2 million for the year ended June 30, 2018, from $1.2 million for the same period of last year. The increase was primarily due to the expansion of the pre-sales and marketing teams in Shanghai and Dalian in China to support operations.

Research and development expenses increased by $3.6 million, or 85.2%, to $7.8 million for the year ended June 30, 2018 from $4.2 million for the same period of last year. The increase was attributable to an increase in the number of research projects and the corresponding increase in the research employee headcount.

General and administrative expenses increased by $0.3 million, or 4.0%, to $5.9 million for the year ended June 30, 2018, from $5.6 million for the same period of last year. The increase was primarily due to personnel increase in support sectors.

Operating Income

Operating income increased by $0.1 million, or 7.5%, to $1.7 million for the year ended June 30, 2018, from $1.6 million for the same period of last year. Operating margin was 3.5% for the year ended June 30, 2018, compared to 5.1% for the same period of last year.

Other Income and Expenses

Subsidies and other income increased to $1.0 million for the year ended June 30, 2018, from $0.5 million for the same period of last year.

Benefit from Income Taxes

Income tax benefit decreased by $0.01 million to $0.11 million for the year ended June 30, 2018, from $0.12 million for the same period of last year, mainly due to the Company's recognition of deferred tax assets as a result of the net operating losses carry forward for certain of the Company's subsidiaries.

Net Income and EPS

Net income increased by $0.5 million, or 22.2%, to $2.7 million for the year ended June 30, 2018, from $2.2 million for the same period of last year. The increase in net income was in line with increased gross profit. After the deduction of non-controlling interests, net income attributable to shareholders for the year ended June 30, 2018, was $2.4 million, or $0.21 per basic and diluted share. This is compared to net income attributable to shareholders of $2.0 million, or $0.18 per basic and diluted share, for the year ended June 30, 2017.

Cash

As of June 30, 2018, the Company had cash and cash equivalents of $9.7 million compared with $4.8 million as of June 30, 2017.

Financial Outlook

For fiscal year 2019, the Company expects, absent material acquisitions or non-recurring transactions, a total sales growth in the range of approximately 30% to 35%, and a net income growth in the range of approximately 30% to 35%, as compared with the 2018 financial results. The foregoing guidance include estimated 2019 financial results of the InfoGain acquisition, an entity in which the Company acquired an 80% equity stake in August 2018. In addition, this guidance necessarily assumes no significant adverse price changes during fiscal year 2019.

This forecast reflects the Company's current and preliminary views, which are subject to change and is subject to risks and uncertainties, including, but not limited to, potential accounting adjustments attributable to InfoGain acquisition as well as risks and uncertainties identified in the Company's public filings.

Conference Call Information

The Company will hold a conference call at 8:30 am ET on September 26, 2018 to discuss fourth quarter and fiscal year 2018 results. Listeners may access the call by dialing:

U.S. Toll-Free:

+1-800-263-0877

U.S. Local /International:

+1-323-794-2094

China National:

400-120-8590

A webcast will also be available through the Company's investor relations website at http://ir.clpsglobal.com/

A replay of the call will be available through October 3, 2018 by dialing:

U.S. Toll-Free:

+1-844-512-2921

U.S. Local/International:

+1-412-317-6671

Passcode:

6685756

About CLPS Incorporation

Headquartered in Shanghai, China, CLPS Incorporation (the "Company") (CLPS) is a global leading information technology ("IT"), consulting and solutions service provider focusing on the banking, insurance and financial sectors. The Company serves as an IT solutions provider to a growing network of clients in the global financial industry, including large financial institutions in the US, Europe, Australia and Hong Kong and their PRC-based IT centers. The Company maintains eleven delivery and/or research & development centers to serve different customers in various geographic locations. Mainland China centers are located in Shanghai, Beijing, Dalian, Tianjin, Chengdu, Guangzhou and Shenzhen. The remaining four global centers are located in Hong Kong, Taiwan, Singapore and Australia. For further information regarding the Company, please visit: http://ir.clpsglobal.com/.

Forward-Looking Statements

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs, including, among other factors, the Company's ability to complete and successfully integrate various acquisitions into its business and operations, to decrease costs, to improve margins and increase profits, and to leverage the target's client base to expand the Company's market and geographical reach, the Company's potential inability to successfully manage completed, proposed or future transactions; the Company's ability to capitalize on and include InfoGain's performance into its own financial performance and results; the Company's ability to manage expenditures relating to research, development, and implementation of the Company's products and services and risks that such products may not be developed successfully or approved for commercial use; infringement of the Company's technology or the assertion that the Company's technology infringes the rights of other parties; potential for significant adverse changes in PRC governing regulations; changes in tax laws and regulations; fluctuations in exchange rates; concentration of a substantial portion of the Company's revenues among a few customers; volatility in the market price of the Company's common stock; the Company's future issuance of non-equity compensation under its equity incentive plans; changes in key personnel; changes in currency exchange rates; growth through acquisitions, including the inability to commercialize technology acquired through and other factors referred to in the Company's Annual Report on Form 20-F for the year ended June 30, 2018 and other materials filed with the Securities and Exchange Commission. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results.

Contact:    

CLPS Incorporation.
Ms. Tian van Acken
Chief Financial Officer
Phone: +86-158-0198-4357
Email: ir@clpsglobal.com

ICR Inc.
Rose Zu
Phone: +1-646-588-0383
Email: ir@clpsglobal.com

CLPS INCORPORATION

UNAUDITED CONSOLIDATED statements of INCOME AND COMPREHENSIVE INCOME



For the Three Months Ended  June 30,


2018


2017







Revenues

$

13,855,300


$

9,170,578

Less: Cost of revenues


(9,015,768)



(5,224,795)

Gross profit


4,839,532



3,945,783







Operating expenses:






   Selling and marketing


621,707



497,782

   Research and development


2,023,553



999,662

   General and administrative


1,728,156



1,639,294

Total operating expenses


4,373,416



3,136,738

Income from operations


466,116



809,045

Subsidies and other income


300,910



45,226

Other expense


(40,427)



(8,022)







Income before income tax


726,599



846,249

(Benefit) provision for income taxes


(67,708)



(105,039)

Net income


794,307



951,288

Less: Net income (loss) attributable to non-controlling interests


66,311



168,716

Net income attributable to CLPS Incorporation's
   shareholders

$

727,996


$

782,572







Other comprehensive (loss) income






Foreign currency translation gain (loss)

$

(414,954)


$

78,520

Less: foreign currency translation gain (loss) attributable to Non-
controlling interest


(36,097)



5,170

Other comprehensive loss attributable to CLPS
          Incorporation's shareholders

$

(378,857)


$

73,350







Comprehensive income






CLPS Incorporation shareholders

$

349,139


$

855,922

Non-controlling interests


30,214



173,886


$

379,353


$

1,029,808







Basic net income per common share* 

$

0.06


$

0.07

Weighted average number of share outstanding – basic


11,517,123



11,290,000

Diluted net income per common share 

$

0.06


$

0.07

Weighted average number of share outstanding – diluted


11,636,367



11,290,000

 

 

CLPS INCORPORATION 

CONSOLIDATED statements of INCOME AND COMPREHENSIVE INCOME



For the Year Ended June 30,


2018


2017







Revenues

$

48,938,593


$

31,361,976

Less: Cost of revenues


(31,277,255)



(18,669,812)

Gross profit


17,661,338



12,692,164







Operating expenses:






   Selling and marketing


2,225,702



1,206,493

   Research and development


7,837,873



4,232,788

   General and administrative


5,871,622



5,647,790

Total operating expenses


15,935,197



11,087,071

Income from operations


1,726,141



1,605,093

Subsidies and other income


960,784



508,187

Other expense


(84,155)



(10,469)







Income before income tax


2,602,770



2,102,811

(Benefit) provision for income taxes


(112,128)



(118,546)

Net income


2,714,898



2,221,357

Less: Net income (loss) attributable to non-controlling interests


280,435



173,912

Net income attributable to CLPS Incorporation's
   shareholders

$

2,434,463


$

2,047,445







Other comprehensive (loss) income






Foreign currency translation gain (loss)

$

55,793



(93,177)

Less: foreign currency translation gain (loss) attributable to Non-
controlling interest


10,200



1,732

Other comprehensive loss attributable to CLPS
Incorporation's shareholders

$

45,593


$

(94,909)







Comprehensive income






CLPS Incorporation shareholders

$

2,480,056


$

1,952,536

Non-controlling interests


290,635



175,644


$

2,770,691


$

2,128,180







Basic net income per common share* 

$

0.21


$

0.18

Weighted average number of share outstanding – basic


11,517,123



11,290,000

Diluted net income per common share 

$

0.21


$

0.18

Weighted average number of share outstanding – diluted


11,636,367



11,290,000


 

 

CLPS INCORPORATION

CONSOLIDATED BALANCE SHEETS



As of June 30,


2018


2017

ASSETS






Current assets






Cash and cash equivalents

$

9,742,886


$

4,814,568

Accounts receivable, net


16,267,835



6,644,774

Prepayments, deposits and other assets, net


1,231,217



578,391

Prepaid income tax


206,361



169,557

Amount due from underwriter on the over-allotment


1,472,592



-

Amount due from related parties


131,321



118,006

Total Current Assets


29,052,212



12,325,296







Property and equipment, net


333,897



273,347

Intangible assets, net


260,059



305,464

Goodwill


173,560



195,080

Escrow receivable


200,000



-

Prepayments, deposits and other assets, net


119,372



123,783

Long-term investment -equity method


142,590



-

Long-term investment -cost method


151,124



-

Deferred tax assets, net


512,097



298,953

Total Assets

$

30,944,911


$

13,521,923







LIABILITIES AND SHAREHOLDERS' EQUITY






Current liabilities






Short-term bank loans

$

2,553,989


$

-

Accounts payable and other current liabilities


1,454,770



239,165

Tax payables


904,850



640,864

Deferred revenue


125,080



110,631

Customer deposits


200,836



97,740

Salaries and benefits payable


7,341,688



5,392,434

Amounts due to related parties


208,342



1,729,791

Total Current Liabilities


12,789,555



8,210,625







Commitments and Contingencies












Shareholders' Equity






Common share, $0.0001 par value; 100,000,000 shares authorized;
     13,590,000 shares issued and outstanding as of June 30, 2018 and
     11,290,000 shares issued and outstanding as of June 30, 2017*


1,359



1,129

Additional paid-in capital


17,285,543



7,120,943

Statuary reserves


1,118,467



680,671

Retained earnings (Accumulated deficit)


(524,618)



(2,521,285)

Accumulated other comprehensive loss


(401,677)



(447,270)







Total CLPS Incorporation's Shareholders' Equity


17,479,074



4,834,188







Non-controlling Interests


676,282



477,110







Total Shareholders' Equity


18,155,356



5,311,298







Total Liabilities and Shareholders' Equity

$

30,944,911


$

13,521,923

 

Cision

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