Hong Kong, October 16th / PRNewswire / -- CLPS Incorporation ("Company" or " CLPS " ) (Nasdaq: CLPS ) today announced its financial results for the second half of the fiscal year 2026 and the full year, ending June 30, 2026.

CLPS indicates that the fiscal year 2026 reflected the resilience of its business model as well as the effectiveness of its strategic transformation. Despite revenue pressures due to a significant customer continuously scaling down its operations at the China Solutions Center (CSC), the company's total revenue still maintained an upward trend: annual revenue increased by 4.7% to $172.2 million, with the second half of the year seeing a 6.6% year-on-year increase to $87.1 million. The growth mainly came from the continued organic growth of its core IT consulting business, accelerated expansion in regions outside mainland China, and triple-digit growth in revenue from customized IT solutions.

To capture the demand from high-value markets, CLPS has accelerated its investment in emerging technologies, with a focus on artificial intelligence ( AI ), robotic process automation ( RPA ), and Web3 . Throughout the year, the revenue from customized IT solution services increased by 113.9% to $5.9 million, becoming the company's second major growth driver. Key projects that were commercialized during this period included the modernization of traditional core banking systems driven by AI , automated testing, Nibot RPA , as well as CAKU digital banking solutions.

The company stated that its profitability for the fiscal year 2026 reflects its intention to invest early in the commercialization of technology. Although these measures have suppressed cost performance in the short term, they have established high-barrier technical capabilities and benchmark cases, which will help to initiate a second growth curve for the company's revenue and enhance its long-term competitive position. Entering the fiscal year 2027, the company will implement stricter cost controls over its customized IT solution business, while also expanding its international presence and the scale of its digital solutions business.

Highlights of the Unaudited Second Half of Fiscal Year 2026(All data compared to the six-month period as of June 30, 2025)

• Revenues increased by 6.6% year-on-year to $87.1 million, from $81.7 million previously.
• Custom IT solution service revenue increased by 103.1% year-on-year to $3.7 million, compared to $1.8 million previously.
• Revenue from outside mainland China increased by 27.6% year-on-year to $30 million, compared to $23.5 million previously. Among them:
• The revenue of the Hong Kong Special Administrative Region increased by 39.0% year-on-year to $11.1 million, compared with $8 million previously.
• Japanese revenue increased by 146.6% year-on-year to $2.8 million, from $1.1 million previously.
• Singapore's revenue increased by 7.0% year-on-year to $13.2 million, from $12.4 million previously.
• U.S. revenue increased by 21.3% year-on-year to $2.2 million, from $1.8 million previously.
• The accounts receivable turnover period has improved to 90 days, from 93 days previously.

Highlights of the audited fiscal year 2026(All data compared to the 12-month period as of June 30, 2025)

• Revenues increased by 4.7% year-on-year to $172.2 million, compared to $164.5 million previously.
• Custom IT solution service revenue increased by 113.9% year-on-year to $5.9 million, from $2.8 million previously.
• Revenue from outside mainland China increased by 47.5% year-on-year to $62.7 million, compared to $42.5 million previously. Among them:
• The revenue of the Hong Kong Special Administrative Region increased by 61.0% year-on-year to 23.2 million US dollars, compared with 14.4 million US dollars previously.
• Singapore's revenue increased by 18.6% year-on-year to $26 million, from $21.9 million previously.
• Japanese revenue increased by 122.7% year-on-year to $4.5 million, from $2 million previously.
• U.S. revenue increased by 63.7% year-on-year to $6.4 million, from $3.9 million previously.
• The total number of customers in the IT service segment increased by 12.5% year-on-year to 359, compared to 319 previously.
• The total number of employees increased by 4.8% year-on-year to 3,705, compared to 3,534 previously.

CLPS CEO Raymond Lin stated: "The fiscal year 2026 is a critical year for CLPS as it involves both structural transformation and resilience. In the face of a significant reduction in business volume from a major client CSC, we have achieved stable organic revenue growth in our core IT consulting services, while also making notable progress in geographical and technological expansion. Since going public in 2018, our revenue has grown from $48.9 million to $172.2 million, representing a compound annual growth rate of 17.0% over the past eight years. This long-term trajectory reflects our operational flexibility, as well as our ability to establish lasting relationships with global financial institutions and acquire new clients in diverse markets."

"One of the core pillars of our strategy is to reduce our dependence on the Chinese market and promote overseas expansion. In fiscal year 2026, revenue from the Asia-Pacific region (excluding mainland China) increased by 45.2% to 56 million US dollars, and its proportion of total revenue continued to rise. We further deepened our market presence in major Asia-Pacific financial centers such as the Hong Kong Special Administrative Region, Singapore, Japan, Malaysia, Indonesia, and the Philippines, and entered the Middle East through the United Arab Emirates. This globalization has diversified our sources of revenue and provided broader market opportunities for higher-value services."

In addition, our commitment to business diversification is also continuously enhancing our overall resilience. Beyond the fundamental advantage of fintech, our business lines have expanded to include payment and credit services, e-commerce, education and study abroad programs, as well as global tourism. By extending our digital transformation capabilities to these different areas, we are leveraging cross-industry synergies and cultivating multiple stable sources of revenue.

At the same time, our investment in research and development and emerging technologies is yielding significant commercial results, driving the accelerated growth of our customized IT solution business. AI is at the forefront of this transformation. Over the past year, we have achieved several operational milestones: collaborated with East Asia Bank to conduct a proof of concept for Nibot within the GenA.I of the Hong Kong Monetary Authority; launched a distribution platform for Web3; and through our subsidiary QCC, we partnered with a new Southeast Asian financial institution to implement a CAKU-driven digital banking solution.

To optimize internal operations, we established AI Rainstorm Factory, transforming the traditional software development lifecycle into a streamlined modular framework. This initiative has driven an intelligent upgrade of the R&D process and significantly improved delivery efficiency. In addition, we have also set up the AI Innovation Committee and launched Athena – a corporate-level AI knowledge assetization project aimed at protecting the company's core knowledge assets, centralizing institutional data, and continuously enhancing productivity.

"Although our active investment in emerging technology benchmark projects has dragged down profit performance this year, these capital investments are necessary and fundamental. They are transforming CLPS from a mature IT service provider into an intellectual property-driven fintech partner. Entering the fiscal year 2027, we will focus on expanding the scale of digital solutions, enhancing operational efficiency, and converting revenue growth into sustainable long-term profitability."

CLPS Chief Financial Officer Rui Yang stated: "Despite the headwinds in revenue caused by the largest customer reorganization in our history during the fiscal year 2026, the company's total revenue still grew by 4.7% to $172.2 million. Most noteworthy is that the business transformation continues to be effective: revenue from customized IT solution services increased by 113.9% to $5.9 million. Equally encouraging is that overseas revenue grew by 47.5% to $62.7 million, reflecting the steady realization of our global expansion strategy and also demonstrating our ability to capture demand in new markets."

Our investment in projects that leverage emerging technologies has increased costs in the short term. In addition, we have recognized impairment of goodwill and a one-time provision for bad debts related to loans to related parties, which have further dragged down earnings for this period. These expenses are non-structural in nature and not indicative of ongoing operational pressures; we believe their impact is short-term. Looking ahead, we expect these projects not to have a significant impact on financial results in the next fiscal year.

"Based on our confidence in intrinsic value and long-term trajectory, we announced a stock repurchase plan in February 2026 to repurchase up to 1 million shares. This move not only reflects our confidence in the future path but also demonstrates our commitment to continuously creating value for shareholders."

Unaudited financial results for the second half of the 2026 fiscal year

Revenue

In the second half of fiscal year 2026, revenue increased by $5.4 million, or 6.6%, to $87.1 million, from $81.7 million previously. The growth in revenue was mainly due to an increased demand for customized IT solution services.

Revenue by Service

• IT Consulting service revenue increased by $3.5 million, or 4.5%, to $82.2 million, from $78.7 million previously; this business segment accounts for 94.4% of total revenue, up from 96.3% before. The growth was mainly driven by an increase in demand from overseas clients.
• Custom IT solution services revenue increased by $1.9 million, or 103.1%, to $3.7 million, from $1.8 million previously; this business accounts for 4.3% of total revenue, up from 2.2% before. The growth was mainly driven by the company's continuous investment in cutting-edge technologies, with projects such as AI, RPA, and CAKU beginning to generate revenue.
• Academic education service revenue decreased by $200,000 year-on-year, or 18.3%, to $800,000, compared to $1 million previously; this business segment accounts for 0.9% of total revenue, up from 1.2% before. The decline is mainly due to the expiration and renewal of core course licenses, which resulted in the company being unable to enroll students for affected courses in some months.
• Other service revenue increased by $200,000 year-on-year, or 86.1%, to $400,000, compared to $200,000 previously; this business segment accounts for 0.5% of total revenue, up from 0.3% before. The growth is mainly due to an increase in demand for other services, including human resources management services.

Revenues by business segment

• Banking business revenue increased by $2.8 million, or 9.3%, to $33.4 million, from $30.6 million previously; this business segment accounted for 38.4% of total revenue in the second half of the fiscal year 2026, compared to 37.5% during the same period of fiscal year 2025.
• Financial management business revenue increased by $1.8 million, or 12.7%, to $15.7 million, from $13.9 million previously; this business segment accounts for 18.0% of total revenue, up from 17.0% before.
• E-commerce business revenue decreased by $1.6 million year-on-year, or 10.7%, to $13.3 million, compared to $14.9 million previously; this business segment accounts for 15.3% of total revenue, up from 18.2% before.
• Automobile business revenue decreased by $6 million, or 52.3%, to $5.6 million, compared to the previous year's $11.6 million; this business segment accounts for 6.4% of total revenue, up from 14.3% previously.

Revenues by Region

• Revenue outside mainland China increased by 27.6% year-on-year to $30 million, from $23.5 million previously. The growth was mainly due to the strong performance of businesses in the Hong Kong Special Administrative Region, Singapore, and Japan, reflecting the success of the company's global expansion strategy.

Gross profit

In the second half of fiscal year 2026, gross profit decreased by $6.1 million, or 35.1%, to $11.1 million, compared to $17.2 million previously. The decline is mainly attributed to the increased delivery costs of customized IT solution projects that adopted emerging technologies such as AI and RPA. These projects are considered benchmark initiatives by the company.

Operating expenses

• Sales and marketing expenses decreased by $600,000, or 24.7%, to $2.1 million, from $2.7 million previously; the proportion of these expenses to total revenue also fell to 2.4%, compared to 3.3% before. The decrease is mainly due to the streamlining of customer account management processes, as well as adjustments to sales performance-based compensation in light of intensified market competition and changes in the business environment.
• R&D expenses increased by $2.2 million, or 83.8%, to $4.7 million, from $2.5 million previously; the proportion of total revenue rose to 5.3%, from 3.1% before. The growth is mainly due to increased investment in emerging technologies, including AI, in order to meet the expected growth in demand for customized IT solutions.
• General and administrative expenses decreased by $2 million, or 11.7%, to $15.7 million, from $17.7 million previously; the proportion of these expenses to total revenue also fell to 18.0%, compared to 21.7% before. The decrease is mainly due to the company's prudent control over expenses and adjustment of management performance-based compensation in light of intensified market competition and changes in the external environment.

Operational losses

In the second half of fiscal year 2026, the operating loss was $12.1 million, compared to $5.5 million previously; the operating profit margin was -13.9%, compared to -6.8% previously.

Other income and expenses

The net amount of other expenditures in the second half of the fiscal year 2026 was 600,000 US dollars, compared to 87,500 US dollars in net other income for the same period last year.

Income tax provision

Income tax provision for the second half of the fiscal year 2026 is $46,900, compared to $70,000 in the same period of the previous year.

Net Loss and Loss Per Share

The net loss for the second half of fiscal year 2026 was 13.2 million US dollars, compared to 6.6 million US dollars in the previous period.

In the second half of fiscal year 2026, the non-GAAP net loss was $11.6 million, compared to the previous value of $6.1 million.

The net loss attributable to the shareholders of CLPS Incorporation was $13.3 million, which represents a basic and diluted loss of $0.44 per share; in the second half of the fiscal year 2025, the net loss attributable to shareholders was $6.7 million, which represents a basic and diluted loss of $0.24 per share.

The non-GAAP net loss attributable to the shareholders of CLPS Incorporation was $11.6 million, which represents a basic and diluted loss of $0.39 per share; in the second half of the 2025 fiscal year, the non-GAAP net loss attributable to shareholders was $6.2 million, which represents a basic and diluted loss of $0.22 per share.

Audited Financial Results for the Fiscal Year 2026

Revenue

Revenues for the fiscal year 2026 increased by $7.7 million, or 4.7%, to $172.2 million, from $164.5 million previously. The revenue growth was mainly due to an increase in demand for IT consulting services and customized IT solution services.

Revenue by Service

• IT Consulting service revenue increased by $5.3 million, or 3.3%, to $164.1 million, from $158.8 million previously; this business segment accounts for 95.3% of total revenue, up from 96.5% before. The growth was mainly driven by an increase in demand from overseas clients.
• Custom IT solution services revenue increased by $3.1 million, or 113.9%, to $5.9 million, from $2.8 million previously; this business accounts for 3.5% of total revenue, up from 1.7% before. The growth is mainly due to the company's continuous investment in cutting-edge technologies, which has enabled projects such as AI, RPA, and CAKU to generate revenue starting this fiscal year.
• Academic education service revenue decreased by $300,000, or 18.6%, to $1.7 million, compared to $2 million previously; this business segment accounts for 1.0% of total revenue, up from 1.2% before. The decline is mainly due to the expiration and renewal of core course licenses, which resulted in the company being unable to enroll students for affected courses in some months.
• Other service revenue decreased by $400,000, or 40.6%, to $500,000, compared to the previous value of $900,000; this business segment accounts for 0.3% of total revenue, up from 0.5% previously. The decline is mainly due to a reduction in demand for other services, including software sales.

Revenues by business segment

• Banking business revenue decreased by $4.6 million year-on-year, or 7.1%, to $59.5 million, from $64.1 million previously; this business segment accounted for 34.6% of total revenue for the fiscal year 2026, compared to 39.0% in fiscal year 2025.
• Financial management business revenue increased by $1 million, or 3.4%, to $30.3 million, from $29.3 million previously; this business segment accounts for 17.6% of total revenue, up from 17.8% before.
• E-commerce business revenue decreased by $1.3 million year-on-year, or 4.4%, to $28.5 million, compared to $29.8 million previously; this business segment accounts for 16.6% of total revenue, up from 18.1% before.
• Automobile business revenue decreased by $4.1 million year-on-year, or 19.8%, to $16.7 million, compared to $20.8 million previously; this business segment accounts for 9.7% of total revenue, up from 12.7% before.

Revenues by Region

• Revenue outside mainland China increased by $20.2 million, or 47.5%, to $62.7 million, from $42.5 million previously. The growth was mainly driven by strong performance in the Asia-Pacific region (excluding mainland China), which saw a year-on-year increase of 45.2%, reflecting the success of the company's global expansion strategy.

Gross profit

For the fiscal year 2026, gross profit decreased by $5.6 million, or 15.5%, to $30.7 million, compared to $36.3 million previously. The decline is mainly attributed to the increased delivery costs of customized IT solution projects that adopted emerging technologies such as AI and RPA, which are benchmark initiatives developed by the company.

Operating Expenses

• Sales and marketing expenses decreased by $1 million, or 19.4%, to $4.2 million, from $5.2 million previously; the proportion of these expenses to total revenue also fell to 2.4%, compared to 3.1% before. The decrease is mainly due to the streamlining of customer account management processes, as well as adjustments to sales performance-based compensation in light of intensified market competition and changes in the business environment.
• R&D expenses increased by $900,000, or 14.7%, to $6.7 million, from $5.8 million previously; the proportion of total revenue rose to 3.9%, from 3.5% before. The increase is mainly due to increased investment in emerging technologies to meet the expected growth in demand for customized IT solutions.
• General and administrative expenses decreased by $1.3 million, or 3.9%, to $30.6 million, from $31.9 million previously; the proportion of these expenses to total revenue also fell to 17.8% from 19.4%. The decrease is mainly due to the company's prudent control over expenses and adjustment of management performance-based compensation in light of intensified market competition and changes in the external environment.

Operational losses

For the fiscal year 2026, the operating loss was $11.5 million, compared to $5.4 million previously; the operating margin was -6.7%, up from -3.3% before.

Other income and expenses

The net amount of other expenditures for the fiscal year 2026 was $700,000, compared to a previous net amount of other income of $300,000.

Income tax provision

Income tax provision for the fiscal year 2026 is set at $200,000, compared to $900,000 in the previous period.

Net Loss and Loss Per Share

The net loss for the fiscal year 2026 was $12.9 million, compared to $6.4 million in the previous period.

For the fiscal year 2026, the non-GAAP net loss was $9.5 million, compared to the previous value of $3.8 million.

The net loss attributable to the shareholders of CLPS Incorporation was $13.2 million, which represents a basic and diluted loss of $0.45 per share; for the fiscal year 2025, the net loss attributable to shareholders was $7 million, which represents a basic and diluted loss of $0.26 per share.

The non-GAAP net loss attributable to the shareholders of CLPS Incorporation is $9.8 million, which represents a basic and diluted loss of $0.33 per share; for the fiscal year 2025, the non-GAAP net loss attributable to shareholders is $4.5 million, which corresponds to a basic and diluted loss of $0.16 per share.

Cash flow

As of June 30, 2026, the company held cash and cash equivalents, as well as restricted cash, amounting to $25.5 million, in addition to $900,000 in short-term investments.

For the 12-month period ending June 30, 2026, the company utilized $400,000 in cash for operating activities, $1.2 million for investing activities, and approximately $1.8 million for financing activities; the impact of exchange rate fluctuations on cash was a positive $600,000. The company believes that its current cash position and operating cash flow are sufficient to meet its expected cash needs for at least the next 12 months.

Financial Outlook

Despite short-term challenges, the company remains confident about its long-term business growth. For the fiscal year 2027, assuming that floating exchange rates may have an impact on financial data and without any major acquisitions or one-time transactions, the company expects total sales to increase by approximately 5% to 10% compared to the fiscal year 2026, with non-GAAP net profit ranging from 3 million to 4 million US dollars.

The company stated that this forecast reflects its current and preliminary judgment, which may change and is subject to risks and uncertainties, including but not limited to the business and operational risks listed in the company's 20-F annual report submitted to the U.S. Securities and Exchange Commission.

Exchange Rate

As of June 30, 2026, items on the balance sheet other than shareholders' equity were converted at a rate of 6.7851 RMB per US dollar, compared to 7.1636 RMB per US dollar as of June 30, 2025. Shareholders' equity items are presented at historical exchange rates. The average conversion rates used for the corresponding periods of the income statements for the fiscal years 2026 and 2025 were 6.9940 RMB per US dollar and 7.2143 RMB per US dollar, respectively. Changes in the exchange rate between RMB and USD may affect the financial results disclosed in US dollars, and may not necessarily reflect actual changes in business or operating results.

About CLPS Incorporation

CLPS Incorporation (Nasdaq: CLPS) was founded in 2005 and is headquartered in Hong Kong. The company is committed to driving digital transformation in various industries and improving operational efficiency through innovations in artificial intelligence, cloud computing, and big data. Its business covers fintech, payment and credit services, e-commerce, education and study abroad programs, as well as global tourism services integrated with transportation services. The company operates in 10 countries around the world, has strategic regional centers in Shanghai (Mainland China), Singapore (Southeast Asia), and California (North America), and has subsidiaries in Japan and the United Arab Emirates, establishing a robust global service network to help traditional industries evolve into data-driven, intelligent ecosystems. For more information, please visit: https://ir.clpsglobal.com, or follow CLPS on Facebook, Instagram, LinkedIn, X, and YouTube.

Forward-looking Statements

Certain statements in this press release constitute “forward-looking statements” as defined and protected by Section 27A of the Revised Securities Act of 1933 and Section 21E of the Revised Securities Exchange Act of 1934. Forward-looking statements include statements regarding the company’s beliefs, plans, objectives, expectations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties, and other factors. Some of these factors may be beyond the company’s control and could cause the company’s actual results, performance, capital, ownership, or achievements to differ materially from those expressed or implied in the forward-looking statements. All such statements attributable to the company are subject to this cautionary note, including but not limited to the risks and uncertainties related to the company’s financial and operational performance for the second half of fiscal year 2026 and for the full year, expectations for future performance, as well as the preliminary outlooks and guidance provided in this presentation, and the risks and uncertainties described in the company’s most recent reports and filings submitted to the U.S. Securities and Exchange Commission (SEC). The aforementioned reports are available upon request from the company or can be obtained through the SEC website at http :// www.sec.gov. The company has no obligation and assumes no responsibility to update, revise, or correct any forward-looking statements after the date of this document or after any such statement is made.

Use of non-GAAP financial indicators

The consolidated financial information is prepared in accordance with Generally Accepted Accounting Principles in the United States (“U.S GAAP”), however, the consolidated statement of changes in shareholders’ equity, the consolidated cash flow statement, and the detailed notes are not presented. The company uses non-GAAP operating income (loss), non-GAAP general and administrative expenses, non-GAAP operating profit margin, non-GAAP net profit (loss) attributable to the shareholders of CLPS Incorporation, as well as basic and diluted non-GAAP earnings (loss) per share, among other non-GAAP financial indicators. Non-GAAP operating income (loss) refers to operating income (loss) after excluding share-based payment expenses and goodwill impairment. Non-GAAP general and administrative expenses refer to general and administrative expenses after excluding share-based payment expenses. Non-GAAP operating profit margin refers to the percentage of non-GAAP operating income to revenue. Non-GAAP net profit (loss) attributable to the shareholders of CLPS Incorporation refers to net profit (loss) attributable to shareholders after excluding share-based payment expenses and goodwill impairment. Basic and diluted non-GAAP earnings (loss) per share refer to non-GAAP net profit (loss) attributable to common stockholders divided by the weighted average number of shares used to calculate basic and diluted earnings per share. The company believes that analyzing these non-GAAP financial indicators separately and excluding the non-cash effects of share-based payments helps to more clearly understand the composition of its performance. The company examines these non-GAAP financial indicators in conjunction with GAAP financial indicators to better understand operational performance and uses them for planning, forecasting, and measuring the differences between actual results and forecasts. The company believes that non-GAAP financial indicators can provide investors and analysts with useful supplementary information, allowing them to assess operational performance without being affected by the non-cash item of share-based payment expenses, which have always been and will continue to be an important recurring expense in the company’s operations.However, non-GAAP financial indicators have significant limitations as analytical tools. One of these limitations is that they do not include all items that affect a company's current net profit. In addition, since different companies measure non-GAAP financial indicators in various ways, it may be impossible to directly compare them with similar indicators used by other companies. Given these limitations, you should not consider non-GAAP financial indicators in isolation, nor should you use them as a substitute for financial indicators prepared in accordance with U.S. GAAP.

The presentation of the aforementioned non-GAAP financial indicators is not intended to be used in isolation, nor is it intended to replace the financial information prepared and presented in accordance with U.S. GAAP. The company advises investors to also carefully consider its GAAP results, supplementary non-GAAP information, as well as the reconciliation tables between the two, in order to gain a more comprehensive understanding of its business. For more information regarding these non-GAAP financial indicators, please refer to the table titled “Non-GAAP and GAAP Results Reconciliations” at the end of this press release.

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