CLPS Incorporation reveals fiscal 2024 results amid global expansion strategy

CLPS Incorporation has reported its financial outcomes for the second half and the full fiscal year of 2024. Despite global economic challenges and reduced demand in IT consulting services, the company pursued an aggressive international expansion strategy, showing resilience in various regions, particularly outside of mainland China.

Key results and regional growth

For the second half of fiscal 2024, the company’s revenue from customized IT solutions surged by 40%, reaching $1.9 million. The growth was significantly influenced by the acquisition of the College of Allied Educators Pte. Ltd. (CAE), enhancing the company’s portfolio in academic education services. The company also reported a gross profit increase of 7.3%, though it recorded a net loss of $0.9 million, a slight improvement from the $1.2 million loss recorded in the same period the previous year.

On a full-year basis, CLPS experienced a decline in total revenue by 5%, totaling $142.8 million, primarily due to reduced demand from existing clients in its IT consulting sector. Despite this, CLPS’s revenue from international markets outside mainland China rose by 37.9%, underscoring its global strategy’s success. Singapore saw revenue growth of 25.8% to $11.0 million, while Hong Kong SAR reported a 44.9% increase to $6.2 million. The United States also showed significant momentum, with revenue rising by 57.2% to $4.4 million.

Strategic acquisitions and expansion efforts

CEO Raymond Lin highlighted that the company’s proactive strategies, including acquisitions such as CAE, were instrumental in navigating a difficult fiscal year. He emphasized that the establishment of the China Development Center (CDC) and the Global Testing Center (GTC) positioned CLPS to meet the growing demand for advanced IT solutions, particularly in customized IT services. CFO Rui Yang reiterated that the company’s emphasis on expanding its global footprint, with notable gains in the Asia-Pacific and North American markets, was crucial to their revenue growth.

Stock performance and outlook

As of mid-October 2024, CLPS’s stock price was recorded at approximately $1.39 per share. This value reflects a year-to-date increase of over 30%, showcasing investor optimism despite short-term revenue declines. However, analysts suggest the stock remains overvalued based on discounted cash flow models, reflecting potential risks if market conditions worsen.

Looking forward to fiscal 2025, CLPS anticipates a sales growth range of 12% to 17%, coupled with a projected non-GAAP net income increase of 15% to 20%. This optimistic outlook factors in the company’s continued focus on international markets and diversified service offerings.