CLPS, Inc. Q4 FY2021 earnings call

• Fiscal 2021 saw revenue increase 41% to $126.1 million and net income up 127% to $7 million y-o-y. - Implemented dual-engine development strategy, improving technology and product capabilities while maintaining business growth. - Acquired a 53.33% stake in MSCT Investment Holdings Limited and formed a joint venture with Columbus Century Development Company for blockchain-based digital asset solutions. - Expanded Southeast Asia business using high strategy delivery teams in Southeast Asia and R&D in China. - Developed a new credit card system in pilot phase, expected to launch early next year. - Purchased office properties in business locations. - Continued R&D in big data, AI, RPA, etc., with plans to launch big data products next year. - Gained IT services contracts in US e-commerce (revenue up 100% in H2 2021) and automotive (up 20% to $5 million in remaining period of fiscal 2021). - Reorganized organizational structure and hired senior management to improve operational efficiency.

For the year ended June 30, 2021, revenues increased 41% to $126.1 million from $89.4 million. The increase in revenue was mainly due to an increase in revenue from IT consulting services, which went from $87.1 million to $122.3 million (+40.3%). Revenue from customized IT solution services rose from $1.8 million to $3.1 million (+69.7%), and revenue from other services increased from $0.4 million to $0.7 million (+51.5%). Gross profit increased 29.1% to $40.2 million from $31.1 million. In the second half of fiscal 2021, revenues increased by $20.9 million or 44.6% to $67.7 million from $46.8 million. IT consulting services revenue grew 43.2% to $65.2 million, customized IT solution services rose 81% to $2.1 million, and other services increased 139.5% to $0.5 million.

• Fiscal year 2022 expects total sales growth in the range of approximately 30% to 35%. - Non-GAAP net income growth expected in the range of approximately 32% to 37% compared to fiscal year 2021 financial results.

Q: What is the reason for tech company monopoly in China and CLPS's pick up since the last tech company issue?

A: Hello. This is Henry Li, the company's COO. Our strong financial numbers for the second half and the full year of fiscal 2021 shows the consistent growth of all clients demand for IT services, specifically in mainland China. Though, we have always pointed out that's all global extension strategy has been very effective of which revenue generated from outside China increased by 28.1% year-over-year. It is undeniable that's our revenue from mainland China significantly contributes, so our aggregate revenue. And so, we believe that it's not a measure of taking advantage on the large tech Creckta. It is the competitive advantage. That's we always hold on. In addition, the effective of our dual-engine growth strategy to diversify our IT product improve our delivery capabilities in domestic and international markets and enhance client royalty vendors to increase our income. Thus, bringing more benefits to our investors and to improve our overall valuation. As you have mentioned, given our position as professional IT service provider, we explore this business opportunity as well. Thank you. And I hope I answered your questions.

Q: The company got global contract in February 2021. Even though the company name was not released, can you provide an update on the cloud global contract? Do CLPS continue exploiting the opportunities are digital currency management for the financial institutions outside of China?

A: Hi. Thank you for the questions. This is Wilson. I would like to reiterate that due to the confidentiality agreement, we cannot disclose the name of the client. However -- so we will live it that way to ensure our long-term and stable relationship with this client. We hope for your understanding our standpoint. However, we are very pleased that our global expansion specifically in the U.S. market has already paid off because of the client we came there. Going back to your questions. Our business with this client is progressively going well. In addition to the current IT consulting services we provide, we are also exploring the possibilities of providing IT solutions services for this client. Yeah. Hello. This is Rita. And let me also add that this client contributes to the RiDiK e-commerce revenue in terms of operational area. In the second half of fiscal year 2021 revenue from e-commerce area increased by more than 100%. We believe that our strong delivery capabilities and advanced IT products will further depend our collaboration with clients. Yes. Thank you for your question.

Q: You guys have released a series of positive announcements this year. But the stock has continued to fall. Why do you think that is? And how do you guys think you're going to turn it around?

A: Hello. This is Rita. Sorry, can you repeat your question? So you guys have released a series of positive announcements this year, but the stock has continued to fall. Why do you think that is? And how will you turn it around? Yeah. Let me take the questions. Some of the top stock price, so volatile. And generally that is because of the market behavior and material has been disclosed. So in some of our strategy, as mentioned by Mr. Raymond, we will continue to implement our dual-engine strategies. We will deliver our results and that'll to our shareholders. I hope I answer your questions.