CLPS Stock: Climbing on Financial Results

CLPS Inc (NASDAQ: CLPS) is headed up, gaining more than 30% in the premarket hours after the company released its unaudited financial results for the six month period that ended on December 31, 2020. This period represents the first half of the company’s fiscal 2021 year.

Here’s what’s going on:

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CLPS Announces Unaudited Financial Results

In the announcement, CLPS said that revenue increased by 37% year over year to $58.3 million, with operating income increasing 213.5% to $3.9 million. 

Net income also saw a meaningful climb, coming in at $4.9 million, up 114.9% year over year with net income attributable to CLPS shareholders increasing 105.2% to $4.9 million. 

Earnings per share came in at $0.30, compared to the $0.17 reported one year ago and net cash provided by operating activities was up 66.2%, coming in at $9.4 million. 

The company also guided for a compelling future. In fact, CLPS expects non-GAAP net income for 2021 to come in between 60% and 65%, revised upward from 32% to 37%. Moreover, the company said that absent material acquisitions or non-recurring transactions, total sales growth in the 2021 year should come in between 30% and 35%. 

Management Commentary

In a statement, Raymond Lin, Co-Founder and Chief Executive Officer at CLPS, had the following to offer:

We have taken extreme but decisive actions and showed highly resilient operational delivery while prioritizing our people and clients during the pandemic. As a professional IT services provider, we stood abreast with our clients to enable and speed up digital transformation ensuring uninterrupted business operations.

Our growth strategy continued to prove its value, enabling us to pivot with agility in this challenging moment. During the period, we have done well in gaining more overseas and domestic clients within our core industry scope. We maintained strong relationship with our existing clients, which resulted to a 98% client retention rate. In addition, we further advanced our mergers and acquisition efforts both domestically and overseas. Our acquisition of the remaining 20% ownership stake in Ridik enabled us to expand our footprint not only in Singapore, but also to its neighboring countries in the Southeast Asia and Asia Pacific regions. In our commitment to sustain a sufficient supply of IT talents, we launched training programs in partnership with educational institutions and non-profit organization in Hong Kong. On top of our annual internship training program, CLPS Academy, the company’s training arm, has successfully carried out its second wave of Global Fintech Internship Program. It aims to introduce fresh talents with up-to-date knowledge and skills in global fintech industry perspective, thus meeting the talent demand from our top tier and global client base.

I am pleased with the solid level of stability and momentum we achieved during the first half of fiscal 2021.I would like to extend my gratitude to our staff, clients, partners, and shareholders for your continued support particularly during this challenging time. We attribute our success to you for your trust and confidence in the company.

The above statement was followed up by Rui Yang, CFO at CLPS. Here’s what he had to offer:

CLPS ended the first half of fiscal year 2021 financial results on a solid note. We delivered total revenue of $58.3 million, a sustained growth of 37.0% year-over-year. Our operating income and net income increased by triple digits year-over-year by 213.5% and 114.9%, respectively, due to the positive effects of the Company’s economies of scale. Our GAAP and non-GAAP basic and diluted earnings per share were $0.30 and $0.39, respectively. As a result of strong demand for IT services from our growing network of clients and enhanced operational efficiency, our non-GAAP net income guidance was adjusted upwards to 60%-65% from 32%-37% for the fiscal 2021. Looking forward, we remain focus and optimistic that our streamlined growth strategy will put us on a firm footing to reach our business goal for the remainder of fiscal 2021.

Risks to Consider Before Buying CLPS Stock

If you’re thinking about buying CLPS stock, it’s important that you consider the risks. After all, there’s no such thing as an investment that comes without risk. When it comes to CLPS, the most significant risks to consider include:

  • Penny Stock. First and foremost, CLPS is a penny stock. As a penny stock, it is known to experience heavy levels of volatility, which can make entrance and exit decisions difficult. Moreover, high levels of volatility can result in significant declines over a short period of time. 
  • Low Institutional Ownership. Institutions own under 2% of CLPS stock. As a result, it’s fair to say that big money players aren’t very interested, which may be a red flag for some. 

Final Thoughts

Sure, there are risks to consider before investing in CLPS, but it’s a hard stock to ignore at the moment. At the end of the day, the company is firing on all cylinders, seeing tremendous growth in both the top line and bottom line. There’s not much more an investor can ask for. 

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