CLPS Incorporation

For the first half of fiscal 2023, revenue increased $0.9 million, or 1.1%, to $76.8 million from $75.9 million. IT consulting services revenue rose to $72.8 million from $72.0 million, customized IT solutions revenue fell to $3.2 million from $3.3 million, and other services revenue rose to $0.8 million from $0.7 million. Gross profit was $18.5 million versus $22.3 million a year ago; operating income was $1.3 million versus $7.6 million; net income was $1.4 million versus $6.5 million, and net income attributable to shareholders was $1.3 million versus $6.3 million. Net cash provided by operating activities increased 29.9% to $17.2 million from $13.2 million, and cash and cash equivalents were $37.6 million as of December 31, 2022 versus $18.4 million at June 30, 2022. For fiscal 2023, management raised/adjusted guidance to approximately 5% to 10% total sales growth and 7% to 12% net income growth compared with fiscal 2022.

The CEO did not attend, so the operating commentary came from Henry Li. He emphasized that CLPS kept growing despite macro uncertainty and exchange-rate pressure, and said the company is focused on four key areas: banking, wealth management, e-commerce, and automotive. He framed overseas expansion as a major priority, citing strong progress in the U.S. and Japan and positioning those markets as future growth engines.

Rita Yang said the company paid its first special cash dividend in December 2022 and intends to declare dividends in the future depending on performance. She walked through the income statement, noting that gross profit fell to $18.5 million from $22.3 million while SG&A rose to $2.7 million, R&D to $4.4 million, and G&A to $10.7 million, all contributing to lower operating income. She also pointed to higher operating cash flow of $17.2 million and a stronger cash balance of $37.6 million, while explaining that margin pressure came from weak short-term demand in banking and e-commerce, higher compensation costs, and COVID-related cost increases.

An analyst asked about unresolved audit issues and possible delisting risk, and management said it is working with U.S. counsel and independent auditors to maintain compliance with SEC and PCAOB requirements. They cited progress in China-U.S. audit cooperation and said they are optimistic the listing will remain intact, though they are waiting for definitive results. The analyst also asked why net income declined, and management pointed to slower global growth, customer budget tightening in banking and e-commerce, higher IT compensation costs, and COVID-related expenses. Another question asked about the GRT IPO, and management said the subsidiary’s listing materials are being updated and that it will keep investors informed.