Shanghai, China, June 27, 2018 (GLOBE NEWSWIRE) -- CLPS Incorporation (the “Company”, “CLPS”, or 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 third fiscal quarter ended March 31, 2018.
Mr. Raymond Lin, Chief Executive Officer of CLPS Incorporation, commented, “We are proud to report our financial results for the third quarter of 2018. Our revenue reached $12.88 million and our net income was $0.6 million for the third quarter, a year-over-year increase of 63.8% and 142.8%, respectively.”
Mr. Lin continued, “As we reflect on the financial results of the fiscal quarter before our successful initial public offering in May 2018, we are pleased with the notable revenue increase in both our IT consulting and customized solution services. We believe that we are positioned for success in the coming fiscal quarters given our solid strategic foundation, stable margins and growth in revenue and net income, and the additional boost that the net proceeds from our initial public offering offer us, as we consider new opportunities and expand existing business lines.”
Third Quarter of 2018 Financial Highlights
| For the Three Months Ended March 31 | ||||||||
| (USD millions, except per share data) | 2018 | 2017 | Change | |||||
| Revenue | 12.88 | 7.87 | 63.8% | |||||
| IT consulting services | 12.21 | 7.23 | 68.8% | |||||
| Customized IT solution services | 0.65 | 0.59 | 9.9% | |||||
| Other | 0.03 | 0.05 | -37.2% | |||||
| Gross Profit | 3.96 | 2.91 | 36.4% | |||||
| Gross Margin | 30.8 | % | 36.9 | % | -6.1 pts | |||
| Operating Profits | 0.16 | 0.28 | -41.7% | |||||
| Operating Margin | 1.3 | % | 3.5 | % | -2.2 pts | |||
| Net Income Attributable to CLPS Incorporation | 0.38 | 0.24 | 56.7% | |||||
| EPS | 0.03 | 0.02 | 50.0% | |||||
- Revenues increased by 63.8% to $12.88 million for the three months ended March 31, 2018, from $7.87 million for the same period of last year, mainly due to an increase in revenues from both IT consulting services and customized IT solution services.
- Gross profit increased by 36.4% to $3.96 million for the three months ended March 31, 2018, from $2.91 million for the same period of last year. Gross margin decreased to 30.8% from 36.9% for the same period of last year.
- Net income attributable to CLPS Incorporation increased by 56.7% to $0.38 million for the three months ended March 31, 2018.
- Basic and diluted earnings per share were $0.03 for the three months ended March 31, 2018, compared with $0.02 for the same period of last year.
Third Quarter of 2018 Financial Results
Revenues
For the three months ended March 31, 2018, revenue increased by $5.01 million, or 63.8%, to $12.88 million from $7.87 million for the same period of last year. The increase in revenue was mainly due to an increase in revenues from both of IT consulting services and customized IT solution services.
Revenue from IT consulting services increased by $4.98 million, or 68.8%, to $12.21 million and accounted for 94.8% of total revenue for the three months ended March 31, 2018 from $7.23 million, or 91.9% of total revenues, 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 March 31, 2018 and 2017, 47.2% and 49.5% of IT consulting service revenue were from international banks, respectively.
Revenue from customized IT solution services increased by $0.06 million, or 9.9%, to $0.65 for the three months ended March 31, 2018 from $0.59 million for the same period of last year. Revenue from other services decreased by $0.02 million, or 37.2%, to $0.03 for the three months ended March 31, 2018 from $0.05 million for the same period of last year. Historically, IT consulting services have contributed the substantial majority of our net revenues.
Gross Profit and Gross Margin
Gross profit increased by $1.05 million, or 36.4%, to $3.96 million for the three months ended March 31, 2018 from $2.91 million for the same period of last year. Gross margin decreased to 30.8% for the three months ended March 31, 2018, from 36.9% 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 $0.04 million, or 10.6% to $0.47 million for the three months ended March 31, 2018 from $0.43 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 $1.02 million, or 83.6%, to $2.25 million for the three months ended March 31, 2018 from $1.23 million for the same period of last year. The increase was attributable to the launch of several research projects related to cloud computing and mobile internet applications in fiscal 2018.
General and administrative expenses increased by $0.10 million, or 10.6%, to $1.08 million for the three months ended March 31, 2018 from $0.98 million for the same period of last year. The increase was primarily due to growth of staff in support sectors.
Operating Income
Operating income decreased by $0.12 million, or 41.7%, to $0.16 million for the three months ended March 31, 2018 from $0.28 million for the same period of last year. Operating margin was 1.3% for the three months ended March 31, 2018, compared to 3.5% for the same period of last year.
Other Income and Expenses
Subsidies and other income increased to $0.29 million for the three months ended March 31, 2018 from $7,952 for the same period of last year. The increase was mainly due to the fact that local governments were in the process of amending the existing subsidy policy and deferred the approvals for government subsidies that were applicable to the Company.
Provision (Benefit) for Income Taxes
Income tax benefit was $0.17 million for the three months ended March 31, 2018, compared to income tax expense of $0.04 million for the same period of last year, mainly due to the Company recognized deferred tax assets as a result of the net operating losses carry forward for some of the Company’s subsidiaries.
Net Income and EPS
Net income increased by $0.35 million, or 142.8%, to $0.60 million for the three months ended March 31, 2018 from $0.25 million for the same period of last year, mainly due to the subsidies and other income as well as tax benefit derived from the net operating loss carried forwards. After the deduction of non-controlling interests, net income attributable to shareholders for the three months ended March 31, 2018 was $0.38 million, or $0.03 per basic and diluted share. This compared to net income attributable to shareholders of $0.24 million, or $0.02 per basic and diluted share for the three months ended March 31, 2017.
Nine Months Ended March 31, 2018 Financial Results
| For the Nine Months Ended March 31 | ||||||||
| (USD millions, except per share data) | 2018 | 2017 | Change | |||||
| Revenue | 35.08 | 22.19 | 58.1% | |||||
| IT consulting services | 33.84 | 20.51 | 65.0% | |||||
| Customized IT solution services | 1.17 | 1.35 | -13.2% | |||||
| Other | 0.07 | 0.33 | -77.7% | |||||
| Gross Profit | 12.82 | 8.75 | 46.6% | |||||
| Gross Margin | 36.5 | % | 39.4 | % | -2.9 pts | |||
| Operating Profits | 1.26 | 0.80 | 58.3% | |||||
| Operating Margin | 3.6 | % | 3.6 | % | 0.0 pts | |||
| Net Income Attributable to CLPS Incorporation | 1.71 | 1.26 | 34.9% | |||||
| EPS | 0.15 | 0.11 | 36.4% | |||||
Revenues
For the nine months ended March 31, 2018, revenue increased by $12.89 million, or 58.1%, to $35.08 million from $22.19 million for the same period of last year. The increase in revenue was mainly due to an increase in revenue from IT consulting services.
Revenue from IT consulting services increased by $13.33 million, or 65.0%, to $33.84 million and accounted for 96.5% of total revenue for the nine months ended March 31, 2018 from $20.51 million, or 92.4% of total revenue, for the same period of last year. The increase was primarily due to the increasing demands for IT consulting service from banks and other financial institutions. For the nine months ended March 31, 2018 and 2017, 46.4% and 54.0% of IT consulting service revenue were from international banks, respectively.
Revenue from customized IT solution service decreased by $0.18 million, or 13.2%, to $1.17 for the nine months ended March 31, 2018 from $1.35 million for the same period of last year. Revenue from other service decreased by $0.26 million, or 77.7%, to $0.07 for the nine months ended March 31, 2018 from $0.33 million for the same period of last year. For the nine months ended March 31, 2018, we strengthened our expertise in the financial industry to leverage our existing industry knowledge and grew our customer base of local Chinese financial institutions.
Gross Profit and Gross Margin
Gross profit increased by $4.07 million, or 46.6%, to $12.82 million for the nine months ended March 31, 2018 from $8.75 million for the same period of last year. Gross margin decreased to 36.5% for the nine months ended March 31, 2018, compared to 39.4% 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 $0.89 million, or 126.3% to $1.60 million for the nine months ended March 31, 2018 from $0.71 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 $2.58 million, or 79.8%, to $5.81 million for the nine months ended March 31, 2018 from $3.23 million for the same period of last year. The increase was attributable to the research projects on office automation system and big data platform for decision-making, and projects related to cloud computing and mobile internet applications.
General and administrative expenses increased by $0.13 million, or 3.4%, to $4.14 million for the nine months ended March 31, 2018 from $4.01 million for the same period of last year. The increase was primarily due to growth of staff in support sectors..
Operating Income
Operating income increased by $0.46 million, or 58.3%, to $1.26 million for the nine months ended March 31, 2018 from $0.80 million for the same period of last year. Operating margin was 3.6% for the nine months ended March 31, 2018, compared to 3.6% for the same period of last year.
Other Income and Expenses
Subsidies and other income increased to $0.66 million for the nine months ended March 31, 2018, from $0.46 million for the same period of last year.
Provision (Benefit) for Income Taxes
Income tax benefit increased by $0.03 million to $0.04 million for the nine months ended March 31, 2018 from $0.01 million for the same period of last year, mainly due to the Company recognized deferred tax assets as a result of the net operating losses carry forward for some of the Company’s subsidiaries.
Net Income and EPS
Net income increased by $0.65 million, or 51.2%, to $1.92 million for the nine months ended March 31, 2018 from $1.27 million for the same period of last year, mainly due to the expansion of business and increased revenues. After the deduction of non-controlling interests, net income attributable to shareholders for the nine months ended March 31, 2018 was $1.71 million, or $0.15 per basic and diluted share. This compared to net income attributable to shareholders of $1.26 million, or $0.11 per basic and diluted share for the nine months ended March 31, 2017.
Financial Condition
As of March 31, 2018, the Company had cash and cash equivalents of $2.90 million, compared with $4.81 million as of June 30, 2017.
About CLPS Incorporation
Headquartered in Shanghai, China, CLPS Incorporation (the "Company") (Nasdaq: 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. All statements other than statements of historical fact in this announcement are forward-looking statements, including, among others. 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, without limitation, the Company’s ability to achieve projected revenue growth, market and client expansion as intended, among other factors. 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.
CLPS INCORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| As of March 31, 2018 | As of June 30, 2017 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 2,900,656 | $ | 4,814,568 | ||||
| Accounts receivable, net | 14,832,141 | 6,644,774 | ||||||
| Prepayments, deposits and other assets, net | 1,219,124 | 578,391 | ||||||
| Prepaid income tax | 151,276 | 169,557 | ||||||
| Amount due from related parties | 87,098 | 118,006 | ||||||
| Total Current Assets | 19,190,295 | 12,325,296 | ||||||
| Property and equipment, net | 371,524 | 273,347 | ||||||
| Intangible assets, net | 288,291 | 305,464 | ||||||
| Goodwill | 210,838 | 195,080 | ||||||
| Prepayments, deposits and other assets, net | 125,928 | 123,783 | ||||||
| Equity investment | 95,654 | - | ||||||
| Deferred tax assets | 382,745 | 298,953 | ||||||
| Total Assets | $ | 20,665,275 | $ | 13,521,923 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and other current liabilities | $ | 696,481 | $ | 239,165 | ||||
| Short-term bank loans | 2,694,258 | - | ||||||
| Taxes payable | 830,869 | 640,864 | ||||||
| Deferred revenue | 131,950 | 110,631 | ||||||
| Customer deposits | 759,341 | 97,740 | ||||||
| Salaries and benefits payable | 6,863,249 | 5,392,434 | ||||||
| Amounts due to related parties | 986,421 | 1,729,791 | ||||||
| Total Current Liabilities | 12,962,569 | 8,210,625 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Common share, $0.0001 par value; 100,000,000 shares authorized; 11,290,000 shares issued and outstanding as of March 31, 2018 and June 30, 2017 * | 1,129 | 1,129 | ||||||
| Additional paid-in capital | 7,120,943 | 7,120,943 | ||||||
| Statuary reserves | 908,847 | 680,671 | ||||||
| Accumulated deficit | (1,042,994 | ) | (2,521,285 | ) | ||||
| Accumulated other comprehensive loss | (22,820 | ) | (447,270 | ) | ||||
| Total CLPS Incorporation’s Shareholders’ Equity | 6,965,105 | 4,834,188 | ||||||
| Non-controlling Interests | 737,601 | 477,110 | ||||||
| Total Shareholders’ Equity | 7,702,706 | 5,311,298 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 20,665,275 | $ | 13,521,923 | ||||
* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.
CLPS INCORPORATION
UNAUDITED CONDENSED CONSOLIDATED statements of INCOME AND COMPREHENSIVE INCOME
| For the three months ended March 31, | For the nine months ended March 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenues | $ | 12,883,298 | $ | 7,867,460 | $ | 35,083,293 | $ | 22,191,398 | ||||||||
| Less: Cost of revenues | (8,919,509 | ) | (4,961,120 | ) | (22,261,487 | ) | (13,445,017 | ) | ||||||||
| Gross profit | 3,963,789 | 2,906,340 | 12,821,806 | 8,746,381 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | 471,064 | 426,093 | 1,603,995 | 708,711 | ||||||||||||
| Research and development | 2,251,332 | 1,226,360 | 5,814,320 | 3,233,126 | ||||||||||||
| General and administrative | 1,079,234 | 975,907 | 4,143,466 | 4,008,496 | ||||||||||||
| Total operating expenses | 3,801,630 | 2,628,360 | 11,561,781 | 7,950,333 | ||||||||||||
| Income from operations | 162,159 | 277,980 | 1,260,025 | 796,048 | ||||||||||||
| Subsidies and other income | 293,076 | 7,952 | 659,874 | 462,961 | ||||||||||||
| Other expense | (30,515 | ) | (301 | ) | (43,728 | ) | (2,447 | ) | ||||||||
| Income before income tax | 424,720 | 285,631 | 1,876,171 | 1,256,562 | ||||||||||||
| Provision (benefit) for income taxes | (170,480 | ) | 40,535 | (44,420 | ) | (13,507 | ) | |||||||||
| Net income | 595,200 | 245,096 | 1,920,591 | 1,270,069 | ||||||||||||
| Less: Net income attributable to non-controlling interests | 220,062 | 5,671 | 214,124 | 5,196 | ||||||||||||
| Net income attributable to CLPS Incorporation’s shareholders | $ | 375,138 | $ | 239,425 | $ | 1,706,467 | $ | 1,264,873 | ||||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Foreign currency translation gain (loss) | $ | 239,523 | $ | 62,128 | $ | 470,747 | $ | (171,697 | ) | |||||||
| Less: foreign currency translation gain (loss) attributable to Non-controlling interests | 25,524 | 3,611 | 46,297 | (3,438 | ) | |||||||||||
| Other comprehensive income (loss) attributable to CLPS Incorporation’s shareholders | $ | 213,999 | $ | 58,517 | $ | 424,450 | $ | (168,259 | ) | |||||||
| Comprehensive income | ||||||||||||||||
| CLPS Incorporation shareholders | $ | 589,137 | $ | 297,942 | $ | 2,130,917 | $ | 1,096,614 | ||||||||
| Non-controlling interest | 245,586 | 9,282 | 260,421 | 1,758 | ||||||||||||
| $ | 834,723 | $ | 307,224 | $ | 2,391,338 | $ | 1,098,372 | |||||||||
| Basic and diluted earnings per common share * | $ | 0.03 | $ | 0.02 | $ | 0.15 | $ | 0.11 | ||||||||
| Weighted average number of share outstanding – basic and diluted | 11,290,000 | 11,290,000 | 11,290,000 | 11,290,000 | ||||||||||||
* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.