Eye-Catching Stock Buzz: CLPS Incorporation (NASDAQ: CLPS)

On Friday, Shares of CLPS Incorporation (NASDAQ: CLPS) showed the bullish trend with a higher momentum of 1.47% and ended its trading session at $6.83. The company traded total volume of 16,873 shares as contrast to its average volume of 87.71K shares. The company has a market value of $90.05M and about 13.38M shares outstanding.

CLPS Incorporation (NASDAQ: CLPS), a leading information technology (“IT”) consulting and solutions service provider focusing on the banking, insurance and financial sectors in China and globally, recently declared its financial results for the fourth fiscal quarter ended June 30, 2018 and fiscal year of 2018.

Fourth Quarter of 2018 Financial Results:

Revenues:

For the fourth quarter of 2018, revenues increased by $4.70M, or 51.1%, to $13.90M from $9.20M for the same period of last year. This increase in revenue was mainly because of a boost in revenue from IT consulting services.

Revenue from IT consulting services increased by $4.70M, or 54.3%, to $13.30M and accounted for 96.1% of total revenue for fourth quarter of 2018 from $8.60M, or 94.1% of total revenue, for the same period of last year. The increase was mainly because of 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 reduced by $0.040M, or 6.9%, to $0.460M for the fourth quarter of 2018 from $0.500M for the same period of last year. During the fourth quarter of 2018, revenue from other services increased by $0.030Mto $0.070M over the fourth quarter of 2018.  The year-over-year decrease in IT solution services was mainly because of the fact that some projects are presently in progress and have not been accomplished as of yet, and therefore revenue has not yet been recognized. The year-over-year increase in other services was mainly because of the increasing demand from existing customers in the fourth quarter of 2018.

Gross Profit and Gross Margin:

Gross profit increased by $0.90M, or 22.7%, to $4.80M for the fourth quarter of 2018 from $3.90M for the same period of last year. Gross margin reduced to 34.9% for the fourth quarter of 2018 contrast to 43.0% for the same period of last year. The decrease in gross margin was mainly because of the lower gross margin of the new projects.

Operating Expenses:

Selling and marketing expenses increased by $0.10M, or 24.9%, to $0.60M for the fourth quarter of 2018 from $0.50M for the same period of last year. The increase was mainly because of the expansion of the pre-sales and marketing teams in Shanghai and Dalian in China to support operations.

Research and development expenses increased by $1.00M, or 102.4%, to $2.00Mfor the fourth quarter of 2018 from $1.00M for the same period of last year. The increase was attributable to a boost in the number of research projects and the related employee headcount.

General and administrative expenses increased by $0.10M, or 5.4%, to $1.70M for the fourth quarter of 2018 from $1.60M for the same period of last year. The increase was mainly because of personnel increases in support sectors.

Operating Income

Operating income reduced by $0.30M, or 42.4%, to $0.50M for the fourth quarter of 2018 from $0.80M for the same period of last year. Operating margin was 3.4% for the fourth quarter of 2018, as contrast to 8.8% for the same period of last year.

Other Income and Expenses:

Subsidies and other income increased to $0.30M for the fourth quarter of 2018, from $0.10M for the same period of last year.

Benefit from Income Taxes:

Income tax benefit reduced by $0.030M to $0.070M for the fourth quarter of 2018 from $0.10M for the same period of last year, mainly because of the Company’s recognition of deferred tax assets as a result of the net operating losses carry forward for certain of the Company’s auxiliaries.

Net Income and EPS:

Net income reduced by $0.20M, or 16.5%, to $0.80M for the fourth quarter of 2018 from $1.00M for the same period of last year. The decrease in net income was because of 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 $0.70M, or $0.06 per basic and diluted share. This is contrast to net income attributable to shareholders of $0.80M, or $0.07 per basic and diluted share, for the fourth quarter of 2017.

Fiscal Year 2018 Financial Results:

Revenues:

For the year ended June 30, 2018, revenues increased by $17.60M, or 56.0%, to $48.90M from $31.40M for the same period of last year. This increase in revenue was mainly because of a boost in revenue from IT consulting services.

Revenue from IT consulting services increased by $18.00M, or 61.8%, to $47.20Mand accounted for 96.4% of total revenue for the year ended June 30, 2018, from $29.10M, or 92.9% of total revenue, for the same period of last year. The increase was mainly because of 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 reduced by $0.20M, or 11.5%, to $1.60M for the year ended June 30, 2018 from $1.80M for the same period of last year. During the year ended June 30, 2018, revenue from other services reduced by $0.20M to $0.10M over the year ended June 30, 2017. The year-over-year decrease in IT solution services was mainly because of some ongoing projects for which revenue has not yet been recognized. The year-over-year decrease in other services was because of one client’s reduced demand in the fiscal year 2018.

Gross Profit and Gross Margin:

Gross profit increased by $5.00M, or 39.2%, to $17.70M for the year ended June 30, 2018, from $12.70M for the same period of last year. Gross margin reduced to 36.1% for the year ended June 30, 2018, contrast to 40.5% for the same period of last year. The decrease in gross margin was mainly because of the lower gross margin of new projects.

Operating Expenses:

Selling and marketing expenses increased by $1.00M, or 84.5%, to $2.20M for the year ended June 30, 2018, from $1.20M for the same period of last year. The increase was mainly because of the expansion of the pre-sales and marketing teams in Shanghaiand Dalian in China to support operations.

Research and development expenses increased by $3.60M, or 85.2%, to $7.80Mfor the year ended June 30, 2018 from $4.20M for the same period of last year. The increase was attributable to a boost in the number of research projects and the corresponding increase in the research employee headcount.

General and administrative expenses increased by $0.30M, or 4.0%, to $5.90M for the year ended June 30, 2018, from $5.60M for the same period of last year. The increase was mainly because of personnel increase in support sectors.

Operating Income:

Operating income increased by $0.10M, or 7.5%, to $1.70M for the year ended June 30, 2018, from $1.60M for the same period of last year. Operating margin was 3.5% for the year ended June 30, 2018, contrast to 5.1% for the same period of last year.

Other Income and Expenses:

Subsidies and other income increased to $1.00M for the year ended June 30, 2018, from $0.50M for the same period of last year.

Benefit from Income Taxes:

Income tax benefit reduced by $0.010M to $0.110M for the year ended June 30, 2018, from $0.120M for the same period of last year, mainly because of the Company’s recognition of deferred tax assets as a result of the net operating losses carry forward for certain of the Company’s auxiliaries.

Net Income and EPS:

Net income increased by $0.50M, or 22.2%, to $2.70M for the year ended June 30, 2018, from $2.20M 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 $2.40M, or $0.21 per basic and diluted share. This is contrast to net income attributable to shareholders of $2.00M, 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 $9.70M contrast with $4.80M as of June 30, 2017.

The Company offered gross profit margin of 36.10%. The stock, as of recent close, has shown the weekly upbeat performance of 9.25% which was maintained at 22.14% in this year.

Bobbie Collins

Bobbie Collins gives us an insight into the most recent news hitting the Technology Sector in Wall Street. He has been an independent financial adviser for over 10 years in the city and in recent years turned his experience in finance and passion for journalism into a full time role. He performs analysis of Companies and publicizes valuable information for shareholder community. Collins is an accomplished journalist who has a passion for travel. His desire to see the world has taken him to countries around the world and given him the opportunity to report for some of the top news organizations.

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