CLPS Incorporation Reports Financial Results for the First Half of Fiscal Year 2026

CLPS Incorporation (the "Company" or "CLPS") (Nasdaq: CLPS), today announced its unaudited financial results for the six months ended December 31, 2025, or the first half of the Company's fiscal year 2026.During this period, while the downsizing of a key client's China Solution Centers (CSCs) continued to create a significant financial impact, the Company delivered a robust financial performance, achieving growth across both the top and bottom lines. Total revenue continued its upward trajectory, and most significantly, the Company realized a year-over-year increase in net income. This growth trend highlights the effectiveness of our stringent resource allocation and our strategic pivot toward high-value international markets and cutting-edge technological integrations.The Company's operational resilience was further demonstrated by its ability to secure new clients and achieve year-over-year growth in IT consulting services, successfully offsetting the impact triggered by a major client's global restructuring strategy in the previous fiscal year. In addition, the digital transformation team's focus on high-demand fields such as artificial intelligence (AI), robotic process automation (RPA), and payment technologies resulted in a remarkable 134.7% increase in customized IT solution services, reaching $2.2 million for the period. These successes were underpinned by the maintenance of long-standing relationships with existing clients and a deliberate reduction in revenue concentration in mainland China in favor of aggressive overseas expansion. As a result, revenue generated from outside of mainland China surged. This was driven by a strong performance of our IT services business in the APAC region, where aggregate revenue (excluding mainland China) rose from $16.9 million to $26.8 million, while the U.S. market saw exceptional growth, with revenue more than doubling—an increase of 101.6% to $4.1 million.First Half of Fiscal 2026 Highlights (all results compared to the six months ended December 31, 2024) Revenue increased by 2.8% to $85.1 million from $82.8 million. Revenue from customized IT solution services increased by 134.7% to $2.2 million from $0.9 million. Revenue generated outside of mainland China increased by 63.1% to $31.0 million from $19.0 million. Gross profit increased by 2.1% to $19.5 million from $19.2 million. Operating income increased by 300.5% to $0.6 million from $0.2 million. Net income increased by 74.9% to $0.3 million from $0.2 million. Total number of clients in IT services sector was 303 compared to 277. Total number of IT projects was 35 compared to 20.Mr. Raymond Lin, Chief Executive Officer of CLPS, commented, "The first half of fiscal year 2026 marks a pivotal turning point for CLPS, demonstrating that our comprehensive strategic transformation is not merely a response to market shifts, but a successful engine for building future-oriented competitive advantages. In the current global economy environment, the deep integration of technology and business is no longer an option; it is essential for survival and leadership. We have acted decisively to diversify our geographic footprint and evolve our service offerings. By reducing our reliance on a single market and expanding our reach into North America, APAC, and the Middle East, we are establishing a more stable and scalable foundation for long-term growth.Our digital transformation team has been at the forefront of this evolution, delivering high-impact solutions that streamline operational efficiency for financial institutions. Our recent partnership with The Bank of East Asia, Limited (BEA) to conduct a Proof of Concept for 'Nibot'—our proprietary AI agent—within the HKMA's GenA.I. Sandbox is a testament to our leadership in integrating RPA with Generative AI to enhance banking efficiency and risk management. Similarly, our successful modernization of a 30-year-old legacy mortgage system for a major Hong Kong bank, achieved in just seven months with a 70% automation rate, provides a clear blueprint for how we can help global institutions shed technical debt and embrace digital agility.We have unveiled a Web3-ready issuance platform that bridges traditional finance and digital assets. This solution enables secure, compliant, and real-time stablecoin settlement, meeting the highest global regulatory standards. To support this accelerating global demand, our Japan subsidiary has officially established an Offshore Delivery Center, strengthening our international business footprint and ensuring we have the localized talent and R&D capabilities to serve our clients 24/7.While we continue to win new business and expand our reach, we remain focused on disciplined resource allocation to ensure that CLPS remains agile, profitable, and at the forefront of the global digital economy."Ms. Rui Yang, Chief Financial Officer of CLPS, said, "I am pleased to report that our disciplined strategic execution has delivered another period of solid growth and enhanced profitability. Total revenue increased by 2.8% to $85.1 million, underpinned by the early success of our corporate transformation efforts. Notably, revenue from customized IT solution services surged 134.7% to $2.2 million, a testament to the strength of our advanced technological capabilities and ability to address complex client requirements. Furthermore, our global expansion strategy continues to yield results, with revenue generated outside mainland China increasing by an impressive 63.1% to $31.0 million.Our commitment to operational efficiency is reflected in our bottom-line results. Gross profit increased by 2.1% to $19.5 million, while operating income tripled—rising 300.5% to $0.6 million. Additionally, net income grew by 74.9% to $0.3 million.Subsequent to the period-end, reinforcing our confidence in the Company's future and intrinsic value, our Board authorized a share repurchase program on February 4, 2026. Effective from February 5 through November 4, 2026, this initiative allows us to repurchase up to 1,000,000 shares in the open market at prices below $2.00 per share. This program underscores our belief that our equity represents a compelling value opportunity and reflects our commitment to enhancing shareholder returns.Although the downsizing of a key client's CSCs remained a headwind during this period, these results demonstrate the resilience of our business model, the effectiveness of our strategic pivot, and our unwavering focus on driving sustainable, profitable growth."First Half of Fiscal Year 2026 Financial ResultsRevenuesIn the first half of fiscal 2026, revenues increased by $2.3 million, or 2.8%, to $85.1 million from $82.8 million in the prior year period. The increase was primarily due to the increased in revenue from IT consulting and customized IT solution services.Revenues by ServiceRevenue from IT consulting services increased by $1.7 million, or 2.2%, to $81.8 million in the first half of fiscal year 2026 from $80.1 million in the prior year period. Revenue from IT consulting services accounted for 96.2% of total revenue compared to 96.7% in the prior year period. The increase was primarily due to a growth in client base and the successful execution of our global expansion strategy. Revenue from customized IT solution services increased by $1.3 million, or 134.7%, to $2.2 million in the first half of fiscal year 2026 from $0.9 million in the prior year period. Revenue from customized IT solution services accounted for 2.6% of total revenue compared to 1.1% in the prior year period. The increase was primarily due to initial success of our corporate transformation efforts and expanded investment in customized IT solution services. During this period, the successful market launch of Nibot began generating revenue. Furthermore, our project to modernize legacy banking systems using AI integration contributed to revenue growth within this service segment. Revenue from academic education services decreased by $0.2 million, or 19.0%, to $0.9 million in the first half of fiscal 2026, from $1.1 million in the prior year period. Revenue from academic education services accounted for 1.0% of total revenue, compared to 1.3% in the prior year period. The decrease was primarily attributable to resource integration following the acquisition of the College of Allied Educators (CAE). Looking ahead, we are focused on generating new momentum by launching innovative courses for CAE to boost enrollment and drive segment revenue growth. Revenue from other services decreased by $0.6 million, or 79.9%, to $0.1 million in the first half of fiscal year 2026 from $0.7 million in the prior year period. Revenue from other services accounted for 0.2% of total revenue compared to 0.8% in the prior year period. The decrease was primarily due to the decrease in revenue from IT product sales and head hunting services.Revenues by Operational AreasRevenue from the banking area decreased by $7.4 million, or 22.0%, to $26.1 million in the first half of fiscal year 2026 from $33.5 million in the prior year period. Revenue from banking area accounted for 30.7% and 40.4% of total revenues in the first half of fiscal 2026 and 2025, respectively. Revenue from the wealth management area decreased by $0.8 million, or 5.1%, to $14.6 million in the first half of fiscal year 2026 from $15.4 million in the prior year period. Revenue from wealth management area accounted for 17.2% and 18.6% of total revenues in the first half of fiscal 2026 and 2025, respectively. Revenue from the e-Commerce area increased by $0.3 million, or 1.9%, to $15.2 million in the first half of fiscal year 2026 from $14.9 million in the prior year period. Revenue from e-Commerce area accounted for 17.9% and 18.0% of total revenues in the first half of fiscal 2026 and 2025, respectively. Revenue from the automotive area increased by $1.9 million, or 21.5%, to $11.1 million in the first half of fiscal year 2026 from $9.2 million in the prior year period. Revenue from automotive area accounted for 13.1% and 11.1% of total revenues in the first half of fiscal 2026 and 2025, respectively. Revenue from the other areas increased by $8.2 million, or 83.6%, to $18.0 million in the first half of fiscal year 2026 from $9.8 million in the prior year period. Revenue from other area accounted for 21.2% and 11.8% of total revenues in the first half of fiscal 2026 and 2025, respectively.Revenues by GeographyRevenue generated outside of mainland China increased by 63.1% to $31.0 million in the first half of fiscal year 2026 from $19.0 million in the prior year period. The increase was primarily due to the strong operational performance in Singapore, Hong Kong SAR, Japan, and USA.Gross Profit and Gross MarginGross profit increased by $0.3 million, or 2.1%, to $19.5 million in the first half of fiscal 2026 compared to $19.2 million in the prior year period. The increase was primarily due to an increase in total revenue. Gross margin decreased to 23.0% in the first half of fiscal 2026 compared to 23.1% in the prior year period.Operating ExpensesSelling and marketing expenses decreased by $0.4 million, or 13.6%, to $2.1 million in the first half of fiscal year 2026 from $2.5 million in the prior year period. As a percentage of total revenues, selling and marketing expenses decreased to 2.5% in the first half of fiscal 2026 compared to 3.0% in the prior year period. The decrease was primarily due to AI-driven automation, workforce optimization, and structural realignment, which reduced redundancies, targeted high-value tasks, and aligned resources with business goals, improving efficiency while lowering expenses.Research and development expenses decreased by $1.3 million, or 38.7%, to $2.0 million in the first half of fiscal year 2026 from $3.3 million in the prior year period. As a percentage of total revenues, research and development expenses decreased to 2.4% in the first half of fiscal 2026 compared to 4.0% in the prior year period. The decrease was primarily due to the redeployment of R&D staff to deliver customized IT solutions, resulting in a reclassification of these expenses as cost of revenues.General and administrative expenses increased by $0.8 million, or 5.8%, to $14.9 million in the first half of fiscal year 2026 from $14.1 million in the prior year period. As a percentage of total revenues, general and administrative expenses increased to 17.6% in the first half of fiscal 2026 compared to 17.1% in the prior year period. The increase was primarily due to the recognition of one-time employee severance costs, which were triggered by a major client's global restructuring strategy.Operating IncomeOperating income increased by $0.4 million, or 300.5% to $0.6 million in the first half of fiscal 2026 from $0.2 million in the same period of the previous year. Operating margin was 0.7% in the first half of fiscal 2026 compared to 0.2% in the prior year period.Other Income and ExpensesTotal other expenses, net of other income was $0.1 million in the first half of fiscal 2026 compared to $0.2 million total other income, net of other expenses in the prior year period.Provision for Income TaxesProvision for income taxes decreased by $0.1 million to $0.2 million in the first half of fiscal 2026 from $0.3 million in the same period of the previous year.Net Income (Loss) and EPSNet income increased by $0.1 million, or 74.9%, to $0.3 million in the first half of fiscal 2026 from $0.2 million net income in the prior year period.Non-GAAP net income[1] decreased by $0.2 million, or 9.5%, to $2.1 million in the first half of fiscal year 2026 from $2.3 million in the prior year period.Net income attributable to CLPS Incorporation's shareholders was $83.0 thousand, or $0.003 basic and diluted earnings per share in the first half of fiscal 2026 compared to a net loss attributable to CLPS Incorporation's shareholders of $0.4 million, or $0.015 basic and diluted losses per share in the prior year period.Non-GAAP net income attributable to CLPS Incorporation's shareholders[2] was $1.8 million, or $0.06 basic and diluted earnings per share in the first half of fiscal 2026 compared to $1.7 million, or $0.06 basic and diluted earnings per share in the prior year period.Cash FlowAs of December 31, 2025, the Company had cash and cash equivalents of $28.4 million compared to $28.2 million as of June 30, 2025.Net cash provided by operating activities was approximately $4.7 million. Net cash used in investing activities was approximately $0.2 million. Net cash used in financing activities was approximately $4.6 million. The effect of exchange rate change on cash was approximately positive $0.4 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 OutlookUndeterred by the short-term challenges, we remain confident about our long-term business growth. For fiscal year 2026, the Company expects, considering our financial numbers could be affected by the floating exchange rate, and absent material acquisitions or non-recurring transactions, total sales growth in the range of approximately 10% to 15% compared to fiscal year 2025 financial results, and non-GAAP net income in the range of approximately $4.4 million to $5.0 million.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 RateThe balance sheet amounts with the exception of equity as of December 31, 2025, were translated at 6.9931 RMB to 1.00 USD compared to 7.1636 RMB to 1.00 USD as of June 30, 2025. The equity accounts were stated at their historical rate. The average translation rates applied to the income statements accounts for the periods ended December 31, 2025 and 2024 were 7.1235 RMB to 1.00 USD and 7.1767 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.

CLPS Incorporation Reports Financial Results for the First Half of Fiscal Year 2026

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