CLPS Incorporation Reports Financial Results for the Second Half and Full Year of Fiscal 2021


HONG KONG, Oct. 15, 2021 /PRNewswire/ — CLPS Incorporation (the “Company” or “CLPS”) (Nasdaq: CLPS), today announced its financial results for the six months ended June 30, 2021 and full year of fiscal year 2021.

Unaudited Second Half of Fiscal 2021 Highlights (all results compared to the six months ended June 30, 2020) 

  • Revenues increased by 44.6% to $67.7 million from $46.8 million.
  • Revenue from IT consulting services increased by 43.2% to $65.2 million from $45.5 million.
  • Revenue from e-Commerce area increased by 101.2% to $11.5 million from $5.7 million.
  • Revenue from automotive area increased by 204.5% to $5.0 million from $1.6 million.
  • Operating income increased by 417.9% to $3.4 million from $0.7 million.
  • Net income increased by 166.0% to $2.1 million from $0.8 million.
  • Net income attributable to CLPS Incorporation’s shareholders increased by 243.7% to $2.0 million, or $0.11 basic and $0.10 diluted earnings per share, compared to net income attributable to CLPS Incorporation’s shareholders of $0.6 million, or $0.04 basic and diluted earnings per share.
  • Non-GAAP net income attributable to CLPS Incorporation’s shareholders1 increased by 59.4% to $5.6 million, or $0.30 basic and $0.29 diluted earnings per share, compared to $3.5 million, or $0.23 basic and diluted earnings per share. Please refer to “Use of Non-GAAP Financial Measures” section for the discussion of such measures used in this press release.

Audited Fiscal Year 2021 Highlights (all results compared to the twelve months ended June 30, 2020) 

  • Revenues increased by 41.0% to $126.1 million from $89.4 million.
  • Revenue from IT consulting services increased by 40.3% to $122.3 million from $87.1 million.
  • Revenue from e-Commerce area increased by 72.5% to $19.2 million from $11.1 million.
  • Revenue from automotive area increased by 132.0% to $8.5 million from $3.6 million.
  • Operating income increased by 161.2% to $8.4 million from $3.2 million.
  • Net income increased by 127.9% to $7.0 million from $3.1 million.
  • Net income attributable to CLPS Incorporation’s shareholders increased by 132.0% to $6.8 million, or $0.39 basic and diluted earnings per share, compared to net income attributable to CLPS Incorporation’s shareholders of $2.9 million, or $0.20 basic and diluted earnings per share.
  • Non-GAAP net income attributable to CLPS Incorporation’s shareholders1 increased by 72.1% to $11.9 million, or $0.69 basic and $0.68 diluted earnings per share, compared to $6.9 million, or $0.47 basic and diluted earnings per share. Please refer to “Use of Non-GAAP Financial Measures” section for the discussion of such measures used in this press release.
  • Number of clients increased by 10.6% to 251 from 227.
  • Revenues from top five clients accounted for 45.7% of total revenue, from 47.3% over the previous year period, which reflects decreased in revenue dependence from major clients.

Mr. Raymond Lin, Co-Founder and Chief Executive Officer of CLPS, commented, “Our second half and full year of fiscal 2021 results affirm the unquestionable value proposition we deliver to our clients and the success of our pipelined strategies. We continued to execute our ‘dual-engine’ development strategy through the improvement of our technology and product capabilities while maintaining the organic growth of our business.”

“We entered into several investments in our commitment to contribute in the digital trend of global finance and to further improve our product roadmap for banking and other financial institutions. Our controlling interest in CLPS – Beefinance, allowed us to navigate into blockchain-based solutions with focused on digital asset for financial institutions such as custody, exchange, payment, and non-fungible token (NFT) distribution platforms.”

“In pursuit of supporting our clients’ digital transformation journey, our i-Lab, the Company’s R&D arm, has been rendering positive results on its research efforts in advanced technologies such as big data, robotic process automation, and artificial intelligence. We also developed a new generation of credit card system, which is powered by distributed microservices and unitized concepts; and can be deployed to cloud native. Now on its pilot phase, the enterprise edition is expected to be launched early next year.”

“As we previously highlighted, CLPS has been aggressive on its global expansion strategy. We gained IT services contracts in the U.S. from major players in e-commerce industry, jumpstarting our U.S. revenue during the fiscal year 2021. Meanwhile, the recent establishment of CLPS Philippines enabled us to further expand our footprint in international market. Furthermore, we underwent corporate restructuring in order to increase our business efficiency. We implemented corporate consolidation and hired senior advisors with extensive experience from top tier financial institutions to guide and streamline our current and business trajectory.”

“Moving into the fiscal year 2022, we remain committed to delivering professional IT services and innovative products by leveraging our current and prospect resources. We are confident that our strategies will further mobilize our growth, thus providing long-term values to our shareholders,” concluded Mr. Lin.

Ms. Rui Yang, Chief Financial Officer of CLPS, commented, “Our strong IT service delivery capabilities sustained our top-line growth, resulting in a 44.6% and 41.0% revenue growth in the second half and full year of fiscal 2021, respectively. In addition, our continuous improved operational efficiency delivered a robust growth in our bottom-line. Our net income significantly increased by triple digits of 166.0% and 127.9% in the second half and full year of fiscal 2021, respectively. Going forward, we will pursue more IT consulting and solution services investments that we can synergize into our core business and develop innovative products and services. We believe that our diversified services and advanced IT products will strengthen our long-term competitive advantage and edge over our competitors.”

Unaudited Second Half of Fiscal Year 2021 Financial Results

Revenues

In the second half of fiscal 2021, revenues increased by $20.9 million, or 44.6%, to $67.7 million from $46.8 million in the prior year period. The increase in revenue was mainly due to the increase in IT consulting services revenue.

Revenues by Service

  • Revenue from IT consulting services increased by $19.7 million, or 43.2%, to $65.2 million in the second half of fiscal year 2021 from $45.5 million in the prior year period. Revenue from IT consulting services accounted for 96.3% of total revenue, compared to 97.2% in the prior year period. The increase was due to the increased demand from existing and new clients; and our improved capability of service delivery.
  • Revenue from customized IT solution services increased by $1.0 million, or 81.0%, to $2.1 million and accounted for 3.1% of total revenue in the second half of fiscal year 2021, up from $1.1 million, or 2.4% of total revenue in the prior year period. The increase was primarily due to the increased demand from existing clients.
  • Revenue from other services increased by $0.3 million, or 179.5%, to $0.5 million and accounted for 0.7% of total revenue in the second half of fiscal year 2021, up from $0.2 million, or 0.3% of total revenue in the prior year period. The increase was primarily due to the increased demand for other services, including headhunting service.

Revenues by Operational Areas

  • Revenue from banking area increased by $8.3 million, or 36.3% to $31.2 million in the second half of fiscal 2021 from $22.9 million in the prior year period. Revenue from banking area accounted for 46.1% and 48.9% of total revenues in the second half of fiscal 2021 and 2020, respectively.
  • Revenue from wealth management area increased by $4.0 million, or 40.1% to $13.8 million in the second half of fiscal 2021 from $9.8 million in the prior year period. Revenue from wealth management area accounted for 20.3% and 21.0% of total revenues in the second half of fiscal 2021 and 2020, respectively.
  • Revenue from e-Commerce area increased by $5.8 million, or 101.2% to $11.5 million in the second half of fiscal 2021 from $5.7 million in the prior year period. Revenue from e-Commerce area accounted for 17.0% and 12.2% of total revenues in the second half of fiscal 2021 and 2020, respectively.
  • Revenue from automotive area increased by $3.4 million, or 204.5% to $5.0 million in the second half of fiscal 2021 from $1.6 million in the prior year period. Revenue from automotive area accounted for 7.4% and 3.5% of total revenues in the second half of fiscal 2021 and 2020, respectively.

Revenues by Geography

  • Revenue generated outside of mainland China increased by 10.4% to $6.9 million in the second half of fiscal year 2021 from $6.3 million in the prior year period. The increase in revenue generated outside mainland China reflects the Company’s successful and continuous global expansion strategy.

Gross Profit

Gross profit increased by $6.0 million, or 37.8%, to $21.7 million in the second half of fiscal year 2021 from $15.7 million in the prior year period.

Operating Expenses

Selling and marketing expenses increased by $0.3 million, or 18.3%, to $2.0 million in the second half of fiscal 2021 from $1.7 million in the prior year period. The increase was primarily due to the increase of salary expenses as new staff were hired to improve the Company’s capability of service delivery to meet clients’ demand. As a percentage of total revenues, selling and marketing expenses decreased to 2.9% in the second half of fiscal 2021 compared to 3.5% in the prior year period. The decrease was primarily due to the increased in operational efficiency as a result of economies of scale.

Research and development expenses increased by $1.8 million, or 32.5%, to $7.2 million in the second half of fiscal 2021 from $5.4 million in the prior year period. The increase primarily resulted from the establishment of new research projects and the Company’s continued R&D efforts in big data, cloud computing, blockchain, robotic process automation (RPA) and artificial intelligence (AI). As a percentage of total revenues, research and development expenses decreased to 10.6% in the second half of fiscal 2021 compared to 11.6% in the prior year period. The decrease was primarily due to the increase in operational efficiency as a result of economies of scale.

General and administrative expenses increased by $1.8 million, or 20.2%, to $10.2 million in the second half of fiscal 2021 from $8.4 million in the prior year period. The increase was primarily due to the increase of non-cash share-based compensation expenses and general and administrative personnel related expenses. After excluding the non-cash share-based compensation expenses, non-GAAP general and administrative expenses2 increased by $0.9 million, or 15.3%, to $6.6 million in the second half of fiscal 2021 from $5.7 million in the prior year period. As a percentage of total revenues, general and administrative expenses decreased to 15.0% in the second half of fiscal 2021 compared to 18.0% in the prior year period. The decrease was primarily due to the increase in operational efficiency as result of economies of scale and refined management.

Operating Income

Operating income increased by $2.7 million, or 417.9%, to $3.4 million in the second half of fiscal year 2021 from $0.7 million in the same period of the previous year. Operating margin was 5.1% in the second half of fiscal 2021, compared to 1.4% in the prior year period.

Other Income and Expenses

Total other expenses, net of other income was $0.2 million in the second half of fiscal 2021, compared to $0.5 million total other income, net of other expenses in the prior year period.

Provision for Income Taxes

Provision for income taxes increased by $0.8 million to $1.2 million in the second half of fiscal 2021 from $0.4 million in the same period of the previous year, mainly due to recognition of deferred tax liability related to the dividend of the Company’s subsidiary.

Net Income and EPS

Net income for the second half of fiscal 2021 increased by $1.3 million, or 166.0%, to $2.1 million from $0.8 million in the prior year period. After excluding the impact of non-cash share-based compensation expenses, non-GAAP net income3 increased by $2.0 million, or 53.7%, to $5.7 million in the second half of fiscal 2021 from $3.7 million in the same period of the previous year.

After excluding the impact of noncontrolling interests, net income attributable to CLPS Incorporation’s shareholders in the second half of fiscal 2021 was $2.0 million, or $0.11 basic and $0.10 diluted earnings per share, compared to net income attributable to CLPS Incorporation’s shareholders of $0.6 million, or $0.04 basic and diluted earnings per share, in the second half of fiscal 2020. After excluding the impact of non-cash share-based compensation expenses, non-GAAP net income attributable to CLPS Incorporation’s shareholders1 in the second half of fiscal 2021 was $5.6 million, or $0.30 basic and $0.29 diluted earnings per share, compared to non-GAAP net income attributable to CLPS Incorporation’s shareholders of $3.5 million, or $0.23 basic and diluted earnings per share, in the second half of fiscal 2020.

Audited Fiscal Year 2021 Financial Results

Revenues

In the fiscal year 2021, revenues increased by $36.7 million, or 41.0%, to $126.1 million from $89.4 million in the prior year period. The increase in revenue was mainly due to the increase in IT consulting services revenue.

Revenues by Service

  • Revenue from IT consulting services increased by $35.2 million, or 40.3%, to $122.3 million in the fiscal year 2021 from $87.1 million in the prior year period. Revenue from IT consulting services accounted for 97.0% of total revenue, compared to 97.5% in the prior year period. The increase was due to the increased demand from existing and new clients; and our improved capability of service delivery.
  • Revenue from customized IT solution services increased by $1.3 million, or 69.7%, to $3.1 million and accounted for 2.5% of total revenue in the fiscal year 2021, up from $1.8 million, or 2.1% of total revenue in the prior year period. The increase was primarily due to the increased demand from existing clients.
  • Revenue from other services increased by $0.3 million, or 51.5%, to $0.7 million and accounted for 0.5% of total revenue in the fiscal year 2021, up from $0.4 million, or 0.5% of total revenue in the prior year period. The increase was primarily due to the increased demand for other services, including headhunting service.

Revenues by Operational Areas

  • Revenue from banking area increased by $15.5 million, or 34.8% to $60.0 million in the fiscal year 2021 from $44.5 million in the prior year period. Revenue from banking area accounted for 47.6% and 49.8% of total revenues in the fiscal year 2021 and 2020, respectively.
  • Revenue from wealth management area increased by $6.0 million, or 31.2% to $25.2 million in the fiscal year 2021 from $19.2 million in the prior year period. Revenue from wealth management area accounted for 20.0% and 21.5% of total revenues in the fiscal year 2021 and 2020, respectively.
  • Revenue from e-Commerce area increased by $8.1 million, or 72.5% to $19.2 million in the fiscal year 2021 from $11.1 million in the prior year period. Revenue from e-Commerce area accounted for 15.2% and 12.4% of total revenues in the fiscal year 2021 and 2020, respectively.
  • Revenue from automotive area increased by $4.9 million, or 132.0% to $8.5 million in the fiscal year 2021 from $3.6 million in the prior year period. Revenue from automotive area accounted for 6.7% and 4.1% of total revenues in the fiscal year 2021 and 2020, respectively.

Revenues by Geography

  • Revenue generated outside of mainland China increased by 28.1% to $13.6 million in the fiscal year 2021 from $10.6 million in the prior year period. The increase in revenue generated outside of mainland China reflects the Company’s successful and continuous global expansion strategy.

Gross Profit

Gross profit increased by $9.1 million, or 29.1%, to $40.2 million in the fiscal year 2021 from $31.1 million in the prior year period.

Operating Expenses

Selling and marketing expenses increased by $0.7 million, or 22.7%, to $3.8 million in the fiscal year 2021 from $3.1 million in the prior year period. The increase was primarily due to the increase of salary expenses as new staff were hired in order to improve the Company’s capability of service delivery to meet clients’ demand. As a percentage of total revenues, selling and marketing expenses decreased to 3.0% in the fiscal year 2021 compared to 3.4% in the prior year period. The decrease reflects an increase in operational efficiency as a result of economies of scale.

Research and development expenses increased by $2.9 million, or 27.8%, to $13.3 million in the fiscal year 2021 from $10.4 million in the prior year period. The increase primarily resulted from the establishment of new research projects and the Company’s continued R&D efforts in big data, cloud computing, blockchain, robotic process automation (RPA) and artificial intelligence (AI). As a percentage of total revenues, research and development expenses decreased to 10.6% in the fiscal year 2021 compared to 11.7% in the prior year period. The decrease reflects an increase in operational efficiency as a result of economies of scale.

General and administrative expenses increased by $0.5 million, or 2.7%, to $16.8 million in the fiscal year 2021 from $16.3 million in the prior year period. The increase was primarily due to the increase of non-cash share-based compensation expenses. After excluding the non-cash share-based compensation expenses, non-GAAP general and administrative expenses2 decreased by $0.8 million, or 6.2%, to $11.8 million in fiscal year 2021 from $12.6 million in the prior year period. As a percentage of total revenues, general and administrative expenses decreased to 13.3% in the fiscal year 2021 compared to 18.3% in the prior year period. The decrease reflects an increase in operational efficiency as result of economies of scale and refined management.

Operating Income

Operating income increased by $5.2 million, or 161.2%, to $8.4 million in the fiscal year 2021 from $3.2 million in the same period of the previous year. Operating margin was 6.6% in the fiscal year 2021, compared to 3.6% in the prior year period.

Other Income and Expenses

Total other expenses, net of other income was $0.1 million in the fiscal year 2021, compared to $0.5 million total other income, net of other expenses in the prior year period.

Provision for Income Taxes

Provision for income taxes increased by $0.5 million to $1.3 million in the fiscal year 2021 from $0.8 million in the same period of the previous year, mainly due to recognition of deferred tax liability related to the dividend of the Company’s subsidiary.

Net Income and EPS

Net income for the fiscal year 2021 increased by $3.9 million, or 127.9%, to $7.0 million from $3.1 million in the prior year period. After excluding the impact of non-cash share-based compensation expenses, non-GAAP net income3 increased by $5.0 million, or 71.5%, to $12.1 million in the fiscal year 2021 from $7.1 million in the same period of the previous year.

After excluding the impact of noncontrolling interests, net income attributable to CLPS Incorporation’s shareholders in the fiscal year 2021 was $6.8 million, or $0.39 basic and diluted earnings per share, compared to net income attributable to CLPS Incorporation’s shareholders of $2.9 million, or $0.20 basic and diluted earnings per share in fiscal year 2020. After excluding the impact of non-cash share-based compensation expenses, non-GAAP net income attributable to CLPS Incorporation’s shareholders1 in the fiscal year 2021 was $11.9 million, or $0.69 basic and $0.68 diluted earnings per share, compared to non-GAAP net income attributable to CLPS Incorporation’s shareholders of $6.9 million, or $0.47 basic and diluted earnings per share in the fiscal year 2020.

Cash Flow

As of June 30, 2021, the Company had cash and cash equivalents of $24.7 million compared to $12.7 million as of June 30, 2020.

Net cash used in operating activities was $2.6 million for the twelve months ended June 30, 2021. Net cash used in investing activities was $5.6 million. Net cash provided by financing activities was approximately $19.3 million. The effect of exchange rate change on cash was approximately positive $1.0 million. The Company believes that its current cash position and cash flow from operations are sufficient to meet its anticipated cash needs for at least the next 12 months.

Financial Outlook

For fiscal year 2022, the Company expects, absent material acquisitions or non-recurring transactions, total sales growth in the range of approximately 30% to 35%, non-GAAP net income growth in the range of approximately 32% to 37% compared to fiscal year 2021 financial results.

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 June 30, 2021, were translated at 6.4566 RMB to 1.00 USD compared to 7.0651 RMB to 1.00 USD as of June 30, 2020. The equity accounts were stated at their historical rate. The average translation rates applied to the income statements accounts for the periods ended June 30, 2021 and 2020 were 6.6212 RMB to 1.00 USD and 7.0309 RMB to 1.00 USD, respectively. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S, dollar terms without giving effect to any underlying change in our business or results of operation.

Conference Call Information

The Company will hold a conference call at 8:30 am ET on October 15, 2021 to discuss second half and full year of fiscal 2021 results. Listeners may access the call by dialing:

U.S. Toll-Free:

+1-888-204-4368

U.S. Local/International:

+1-323-994-2093

Mainland China:

400 120 9101

Hong Kong:

800 961 384

To access the live webcast of the conference call, please visit this link. The live and archived webcast will also be available through the Company’s investor relations website at https://ir.clpsglobal.com/.

A replay of the call will be available through October 29, 2021 by dialing:

U.S. Toll-Free:

+1-844-512-2921

U.S. Local/International:

+1-412-317-6671

Passcode:

6765992

About CLPS Incorporation

Headquartered in Hong Kong, 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, Southeast Asia and Hong Kong, and their PRC-based IT centers. The Company maintains 19 delivery and/or research & development centers to serve different customers in various geographic locations. Mainland China centers are located in Shanghai, Beijing, Dalian, Tianjin, Baoding, Xi’an, Chengdu, Guangzhou, Shenzhen, Hangzhou, and Hainan. The remaining eight global centers are located in Hong Kong SAR, USA, Japan, Singapore, Malaysia, Australia, India, and the Philippines. For further information regarding the Company, please visit: https://ir.clpsglobal.com/, or follow CLPS on Facebook, LinkedIn, and Twitter.

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 second half and full year of fiscal 2021, 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 United States of America (“U.S. GAAP”), except that the consolidated statement of changes in shareholders’ equity, consolidated statements of cash flows, and the detailed notes have not been presented. The Company uses non-GAAP operating income, non-GAAP general and administrative expenses, non-GAAP operating margin, non-GAAP net income attributable to CLPS Incorporation’s shareholders, and basic and diluted non-GAAP net income per share, which are non-GAAP financial measures. Non-GAAP operating income is operating income excluding share-based compensation expenses. 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. Non-GAAP operating margin is non-GAAP operating income as a percentage of revenues. Non-GAAP net income attributable to CLPS Incorporation’s shareholders is net income attributable to CLPS Incorporation’s shareholders excluding share-based compensation expenses. Basic and diluted non-GAAP net income per share is non-GAAP net income attributable to common shareholders divided by weighted average number of shares used in the calculation of basic and diluted net income per share. The Company believes that separate analysis and exclusion of the non-cash impact of share-based compensation expenses clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

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 “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 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 “Reconciliation of Non-GAAP and GAAP Results” for details.

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 “Reconciliation of Non-GAAP and GAAP Results” for details.

3  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 “Reconciliation of Non-GAAP and GAAP Results” for details

 

 

 

CLPS INCORPORATION

CONSOLIDATED BALANCE SHEETS

 (Amounts in U.S. dollars (“$”), except for number of shares)




As of June 30,

As of December

31,




2021

(Audited)



2020

(Unaudited)


ASSETS







Current assets:









Cash and cash equivalents


$

24,739,382



$

25,981,167


Short-term investments



4,158,535





Accounts receivable, net



44,138,997




31,205,299


Prepayments, deposits and other assets, net



2,530,458




1,545,239


Prepaid income tax






884,720


Amounts due from related parties



546,128





Total Current Assets



76,113,500




59,616,425











Non-Current assets:









Property and equipment, net



600,791




585,079


Intangible assets, net



1,050,499




1,202,449


Goodwill



2,444,950




2,234,615


Long-term investments



1,014,784




900,091


Prepayments, deposits and other assets, net



896,145




537,063


Deferred tax assets, net



607,773




448,154


Total Assets


$

82,728,442



$

65,523,876











LIABILITIES AND SHAREHOLDERS’ EQUITY









Current liabilities:









Bank loans  


$

7,536,839



$

5,005,402


Accounts payable



559,450




535,055


Accrued expenses and other current liabilities



245,408




238,456


Tax payables



1,715,009




1,626,017


Contract liabilities



326,912




868,222


Salaries and benefits payable



12,466,921




19,472,224


Amounts due to related party  



183,148




67,918


Total Current Liabilities



23,033,687




27,813,294











Non-Current liabilities:









Bank loans



9,644




16,925


Deferred tax liabilities



155,033




143,846


Other non-current liabilities



1,799,383




311,923


 TOTAL LIABILITIES



24,997,747




28,285,988


Commitments and Contingencies


















Shareholders’ Equity









Common stock, $0.0001 par value, 100,000,000 shares authorized;

    20,293,552 shares issued and outstanding as of June 30, 2021;

   16,345,053 shares issued and outstanding as of December 31,2020



2,029




1,635


Additional paid-in capital



48,516,695




30,081,334


Statutory reserves



4,214,075




2,954,993


Retained earnings



2,726,165




2,028,791


Accumulated other comprehensive income



1,230,083




770,144











Total CLPS Incorporation Shareholders’ Equity



56,689,047




35,836,897











Noncontrolling Interests



1,041,648




1,400,991











Total Shareholders’ Equity



57,730,695




37,237,888











Total Liabilities and Shareholders’ Equity


$

82,728,442



$

65,523,876


 

 

 

CLPS INCORPORATION

UNAUDITED CONSOLIDATED statements of INCOME AND COMPREHENSIVE INCOME

(Amounts in U.S. dollars (“$”), except for number of shares)






For the six months ended

June 30,




2021



2020









Revenues


$

67,743,485



$

46,847,534


Less: Cost of revenues (note 1)



(46,050,474)




(31,104,457)


Gross profit



21,693,011




15,743,077











Operating income (expenses):









Selling and marketing expenses (note 1)



(1,959,429)




(1,655,650)


Research and development expenses



(7,176,725)




(5,416,455)


General and administrative expenses (note 1)



(10,155,688)




(8,446,840)


Subsidies and other operating income



1,041,167




440,533


Total operating expenses



(18,250,675)




(15,078,412)


Income from operations



3,442,336




664,665


Other income   



149,323




535,927


Other expenses



(301,821)




(77,229)











Income before income tax and share of income (loss) in  

  equity investees



3,289,838




1,123,363


Provision for income taxes



1,164,910




446,601


Income before share of income (loss) in equity investees



2,124,928




676,762


Share of (loss) income in equity investees, net of tax



(37,994)




107,895


Net income



2,086,934




784,657


Less: Net income attributable to noncontrolling interests



130,478




215,359


Net income attributable to CLPS Incorporation’s

    shareholders


$

1,956,456



$

569,298











Other comprehensive income (loss)









Foreign currency translation income (loss)


$

468,792



$

(432,198)


Less: foreign currency translation income (loss) attributable

   to noncontrolling interest



8,853




(30,277)


Other comprehensive income (loss) attributable to CLPS

   Incorporation’s shareholders


$

 

459,939



$

 

(401,921)











Comprehensive income attributable to









CLPS Incorporation‘s shareholders


$

2,416,395



$

167,377


Comprehensive income attributable to noncontrolling interests



139,331




184,562


Comprehensive income


$

2,555,726



$

351,939











Basic earnings per common share


$

0.11



$

0.04


Weighted average number of share outstanding – basic



18,514,807




15,169,655


Diluted earnings per common share


$

0.10



$

0.04


Weighted average number of share outstanding – diluted



19,097,170




15,212,010


Note:









(1)    Includes share-based compensation expenses as follows:

       
Cost of revenues



4,221




9,042


Selling and marketing expenses



42,556




181,257


General and administrative expenses



3,586,593




2,747,132


 

 

 










CLPS INCORPORATION

RECONCILIATION OF NON-GAAP AND GAAP RESULTS

(Amounts in U.S. dollars (“$”), except for number of shares)

 





For the six months ended 

June 30,





2021




2020

(Unaudited)

(Unaudited)










Cost of revenues



$

(46,050,474)



$

(31,104,457)

Less: share-based compensation expenses




(4,221)




(9,042)

Non-GAAP cost of revenues



$

(46,046,253)



$

(31,095,415)










Selling and marketing expenses



$

(1,959,429)



$

(1,655,650)

Less: share-based compensation expenses




(42,556)




(181,257)

Non-GAAP selling and marketing expenses



$

(1,916,873)



$

(1,474,393)










General and administrative expenses



$

(10,155,688)



$

(8,446,840)

Less: share-based compensation expenses




(3,586,593)




(2,747,132)

Non-GAAP general and administrative expenses



$

(6,569,095)



$

(5,699,708)










Operating income



$

3,442,336



$

664,665

Add: share-based compensation expenses




3,633,370




2,937,431

Non-GAAP operating income



$

7,075,706



$

3,602,096










Operating margin




5.1%




1.4%

Add: share-based compensation expenses




5.3%




6.3%

Non-GAAP operating margin




10.4%




7.7%










Net income



$

2,086,934



$

784,657

Add: share-based compensation expenses




3,633,370




2,937,431

Non-GAAP net income



$

5,720,304



$

3,722,088










Net income attributable to CLPS Incorporation’s

shareholders



$

1,956,456



$

569,298

Add: share-based compensation expenses




3,633,370




2,937,431

Non-GAAP net income attributable to CLPS

Incorporation’s shareholders




5,589,826




3,506,729

$

$










Weighted average number of share outstanding used

in computing GAAP and non-GAAP basic earnings




18,514,807




15,169,655

GAAP basic earnings per common share



$

0.11



$

0.04

Add: share-based compensation expenses




0.19




0.19

Non-GAAP basic earnings per common share



$

0.30



$

0.23










Weighted average number of share outstanding used

in computing GAAP diluted earnings




19,097,170




15,212,010

Weighted average number of share outstanding used

in computing non-GAAP diluted earnings




19,097,170




15,212,010










GAAP diluted earnings per common share



$

0.10



$

0.04

Add: share-based compensation expenses




0.19




0.19

Non-GAAP diluted earnings per common share



$

0.29



$

0.23





















     

 

CLPS INCORPORATION

AUDITED CONSOLIDATED BALANCE SHEETS

 (Amounts in U.S. dollars (“$”), except for number of shares)






As of June 30,




2021



2020


ASSETS







Current assets:









Cash and cash equivalents


$

24,739,382



$

12,652,120


Short-term investments



4,158,535




636,934


Accounts receivable, net



44,138,997




25,753,856


Prepayments, deposits and other assets, net



2,530,458




1,280,967


Prepaid income tax






15,780


Amounts due from related parties



546,128




169,185


Total Current Assets



76,113,500




40,508,842











Non-current assets:









Property and equipment, net



600,791




452,472


Intangible assets, net



1,050,499




1,144,579


Goodwill



2,444,950




2,118,700


Long-term investments



1,014,784




680,131


Prepayments, deposits and other assets, net



896,145




244,387


Deferred tax assets, net



607,773




203,247


Total Assets


$

82,728,442



$

45,352,358











LIABILITIES AND SHAREHOLDERS’ EQUITY









Current liabilities









Bank loans


$

7,536,839



$

2,161,239


Accounts payable



559,450




268,661


Accrued expenses and other current liabilities



245,408




220,382


Tax payables



1,715,009




1,426,614


Contract liabilities



326,912




755,178


Salaries and benefits payable



12,466,921




11,522,268


Amounts due to related party



183,148





Total Current Liabilities



23,033,687




16,354,342











Non-current liabilities









Bank loans



9,644




22,554


Deferred tax liabilities



155,033




163,163


Other non-current liabilities



1,799,383




194,939


 TOTAL LIABILITIES



24,997,747




16,734,998


Commitments and Contingencies


















Shareholders’ Equity









Common stock, $0.0001 par value, 100,000,000 shares authorized;

   20,293,552 shares issued and outstanding as of June 30, 2021;

   15,930,330 shares issued and outstanding as of June 30, 2020



2,029




1,593


Additional paid-in capital



48,516,695




28,586,048


Statutory reserves



4,214,075




2,803,811


Retained earnings (Accumulated deficits)



2,726,165




(2,680,143)


Accumulated other comprehensive income (loss)



1,230,083




(1,362,665)











Total CLPS Incorporation’s Shareholders’ Equity



56,689,047




27,348,644











Noncontrolling Interests



1,041,648




1,268,716











Total Shareholders’ Equity



57,730,695




28,617,360











Total Liabilities and Shareholders’ Equity


$

82,728,442



$

45,352,358


 

 

 

CLPS INCORPORATION

AUDITED CONSOLIDATED statements of INCOME AND COMPREHENSIVE INCOME

(Amounts in U.S. dollars (“$”), except for number of shares)






For the years ended

June 30,




2021



2020









Revenues


$

126,061,693



$

89,415,798


Less: Cost of revenues (note 1)



(85,890,757)




(58,296,097)


Gross profit



40,170,936




31,119,701











Operating income (expenses):









Selling and marketing expenses (note 1)



(3,753,236)




(3,059,877)


Research and development expenses



(13,337,913)




(10,436,975)


General and administrative expenses (note 1)



(16,784,688)




(16,343,936)


Subsidies and other operating income



2,080,087




1,927,230


Total operating expenses



(31,795,750)




(27,913,558)


Income from operations



8,375,186




3,206,143


Other income



296,319




608,638


Other expenses



(351,045)




(107,322)











Income before income tax and share of income (loss) in equity

   investees



 

8,320,460




3,707,459


Provision for income taxes



1,257,124




835,444


Income before share of income (loss) in equity investees



7,063,336




2,872,015


Share of (loss) income in equity investees, net of tax



(44,121)




207,363


Net income



7,019,215




3,079,378


Less: Net income attributable to noncontrolling interests



202,643




141,139


Net income attributable to CLPS Incorporation’s

    shareholders


$

 

6,816,572



$

2,938,239











Other comprehensive income (loss)









Foreign currency translation income (loss)


$

2,695,223



$

(571,943)


Less: foreign currency translation income (loss) attributable

   to noncontrolling interests



 

102,475




(22,928)


Other comprehensive income (loss) attributable to CLPS

   Incorporation’s shareholders


$

 

2,592,748



$

(549,015)











Comprehensive income attributable to









   CLPS Incorporation‘s shareholders


$

9,409,320



$

2,389,224


Comprehensive income attributable to noncontrolling interests



305,118




118,211


Comprehensive income


$

9,714,438



$

2,507,435











Basic earnings per common share


$

0.39



$

0.20


Weighted average number of share outstanding – basic



17,279,443




14,689,224


Diluted earnings per common share


$

0.39



$

0.20


Weighted average number of share outstanding – diluted



17,569,440




14,692,299


Note:









(1)   Includes share-based compensation expenses as follows:

     
Cost of revenues



8,403




14,110


Selling and marketing expenses



122,087




211,573


General and administrative expenses



4,998,206




3,778,397


 

 

CLPS INCORPORATION

RECONCILIATION OF NON-GAAP AND GAAP RESULTS

(Amounts in U.S. dollars (“$”), except for number of shares)

 










For the years ended 

June 30,





2021




2020












Cost of revenues



$

(85,890,757)



$

(58,296,097)

Less: share-based compensation expenses




(8,403)




(14,110)

Non-GAAP cost of revenues



$

(85,882,354)



$

(58,281,987)










Selling and marketing expenses



$

(3,753,236)



$

(3,059,877)

Less: share-based compensation expenses




(122,087)




(211,573)

Non-GAAP selling and marketing expenses



$

(3,631,149)



$

(2,848,304)










General and administrative expenses



$

(16,784,688)



$

(16,343,936)

Less: share-based compensation expenses




(4,998,206)




(3,778,397)

Non-GAAP general and administrative expenses



$

(11,786,482)



$

(12,565,539)










Operating income



$

8,375,186



$

3,206,143

Add: share-based compensation expenses




5,128,696




4,004,080

Non-GAAP operating income



$

13,503,882



$

7,210,223










Operating Margin




6.6%




3.6%

Add: share-based compensation expenses




4.1%




4.5%

Non-GAAP operating margin




10.7%




8.1%










Net income



$

7,019,215



$

3,079,378

Add: share-based compensation expenses




5,128,696




4,004,080

Non-GAAP net income



$

12,147,911



$

7,083,458










Net income attributable to CLPS Incorporation’s

shareholders



$

6,816,572



$

 

2,938,239

Add: share-based compensation expenses




5,128,696




4,004,080

Non-GAAP net income attributable to CLPS

Incorporation’s shareholders



$

11,945,268



$

6,942,319










Weighted average number of share outstanding used

in computing GAAP and non-GAAP basic earnings




17,279,443




14,689,224

GAAP basic earnings per common share



$

0.39



$

0.20

Add: share-based compensation expenses




0.30




0.27

Non-GAAP basic earnings per common share



$

0.69



$

0.47










Weighted average number of share outstanding used

in computing GAAP diluted earnings




17,569,440




 

14,692,299

Weighted average number of share outstanding used

in computing non-GAAP diluted earnings




17,569,440




14,692,299










GAAP diluted earnings per common share



$

0.39



$

0.20

Add: share-based compensation expenses




0.29




0.27

Non-GAAP diluted earnings per common share



$

0.68



$

0.47










 

 

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