CLPS, Inc. Q2 FY2022 earnings call

• CLPS achieved over 30% year-over-year revenue growth since listing on NASDAQ, with existing clients forming a large portion of business.
• LinkCrypto in Hong Kong generated revenue in the first half of fiscal 2022 and is promoting NFT platforms.
• Joint venture MSCT is implementing loan for employee solutions and researching next-gen loan systems for banks.
• Qinson credit card company advanced, with ongoing discussions with overseas banks for partnerships.
• Developed digital renminbi turnkey solution in partnership with a leading Chinese bank and a digital renminbi ecommerce platform.
• Increased investment in Southeast Asia, entering tourism and education industries, leveraging tech innovation for growth.

In the first half of fiscal year 2022, CLPS Incorporation's revenues increased to $75.9 million, up 30.2% from $58.3 million. IT consulting services revenue saw a 26.2% increase to $72 million. Customized IT solutions services revenue jumped 208.1% to $3.3 million. Other services revenue rose 236.7% to $0.7 million. Gross profit was $22.3 million (20.7% of revenue). Operating income was $7.6 million, up 54.2%. Net income was $6.5 million, up 31.2%. Cash and cash equivalents as of December 31, 2021, were $21.7 million. Total employees were 3,667, up 9.6% year-over-year. Revenue per employee was $20,700, up 18.8%, and net income per employee was $1,800, up 19.7%.

• Expected total sales growth in fiscal year 2022 to be in the range of approximately 30% to 35%.
• Anticipates non-GAAP net income growth in the range of approximately 32% to 37% compared to fiscal year 2021 financial results.

Q: What's the strategy to keep momentum in overseas markets and reason for increase in G&A expense?

A: Wilson Wong stated CLPS is expanding international presence, investing in Southeast Asia and targeting U.S. for business opportunities. Rita Yang explained G&A expense increase was due to hired new staff, salary expenses, and share-based compensation.

Q: About customized IT solutions services revenue increase over 200%, what drives its growth going forward?

A: Henry Li mentioned the dual-engine strategy, horizontally bringing in new clients and expanding overseas, vertically expanding services for existing clients, with IT consulting and customized IT solutions being complementary.