Full Year 2022 CLPS Inc Earnings Call
Hello, everyone and welcome to the second half and full year of fiscal 2022 earnings conference call for C. O P. S incorporation please.
Today's conference is being recorded.
At this time I'd like to turn the call over to Mr. Wang.
C O P S Investor relations for opening remarks and introductions. Please go ahead.
Thank you operator, Hello, everyone and welcome to see L. P. S. Incorporations second happened well your fiscal 2022 earnings conference call.
L P Acne Corporation announced its second half and full year fiscal 2022 quite natural result, early this morning.
The earnings release is now available on the company's IR website at IR, <unk> com and across different times website. Before we continue. Please note that our discussions today may include forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve a.
A number of risks and uncertainties as such our results may be materially different from the views expressed today further information regarding this week and uncertainties assumptions and other factors that could affect our financial results.
And in our form 20-F filed with the U S. U S Securities and Exchange Commission and other documents filed with the U S. S E E and they respect I would like to read the following disclaimer applicable to such statements are the statements made in this discussion are forward looking statements within the media protection.
<unk> 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act of 1934 as amended forward looking statements include statements with respect to the company's beliefs plans objectives, both expectations anticipations assumptions estimates intentions.
And future performance and involve known and unknown risks uncertainties and other factors, which may be beyond the company's control and which may cause the act.
<unk> results performance capital ownership or achievement of the company to be materially different from future results performance or achievements expressed or implied by such forward looking statements. All such statements that should be attributable to either expressly qualified in their entirety by discretionary lucky including without.
Asia, and those risks and uncertainties related to the company's financial and operational performance in the second half and full year fiscal 'twenty to 'twenty two.
Expectations of the company's future performance, it's preliminary outlook and guidance offered in this presentation as well if there are risks and uncertainties described in the company's most recently filed SEC reports and filings such reports are available upon request from the company or from the Securities and Exchange Commission.
Including through the Internet.
Internet website at Ww W. E T that well, we have no obligation and do not undertake to update or revise or correct any of the forward looking statements. After the date hereof or after their respective dates on which any such statements otherwise there make all.
All information provided today as of the date of this call and C. L. P. S does not undertake any obligation to update any forward looking statement is that as required under applicable law with respect to any non-GAAP measures discussed during today's call. The company reconciliation information related to those measures can be found either.
The release issued this morning.
Now allow me to introduce the management team on the call today, Mr. Henry Lee Chief operating Officer, a L. P. S will start up the call with a review of recent company developments and operating results followed by Mr. <unk> Yang Chief Financial Officer of Yelp, yet who will discuss financial results in more detail. Please note.
All lines have been placed on mute to prevent background noise. Following management's prepared remarks, we will open up the call for a Q&A session. Mr. Wilson Wong Executive Vice President of C. O. P. S will also be joining the Q&A session.
With that said I would now like to try to call the Alberta.
Henry Please go ahead.
Thank you Ryan and thank you all trade Sir.
I'd like to welcome and there's some to you all for participating the call on behalf of our CEO Mr. Raymond Lin.
Although our business continues to grow as <unk> actually achieved yet another record setting revenue.
Later on all our CFO , Mr. <unk> will discuss our financial results in more detail.
In fiscal year 2022 we continued to achieve good results, primarily driven by the success of our do you I'm just strategy.
We have placed.
The underlying strengths of our core competitiveness, yeah, I T consulting services.
<unk> enable our clients to grow their business.
For example through <unk>.
They're teaching their digital transformation initiatives.
Going forward, we will boost our I T consulting services.
According the expansion of our offshore development center to offer our clients a cross global at least professional services.
As well as provide flexibility to meet their specific needs.
You know our previous financial report, we highlighted our plan to strengthen the customized solutions so as to boost our financial performance.
As a result of product innovations and the business development advancements.
The revenue for our customized IP solutions and services increased by Landry's pinpoint to a prison.
On year to $6 $7 million.
Our commitment to investing in the West IP per data Center solutions will continue throughout the new fiscal year.
These include.
First you.
We are proud to announce that we have all officially launched the <unk>.
Sure edition of our new generation credit cost save some for Dr. Kaku Beach.
Which means crew caught.
It's a proprietary product that's self has independently developed put it based on our extensive experience in the financial industry as well as deep understanding in the current banking bill since the mass and the industry development paths.
Our initial target market and the small and medium sized financial institutions in southeast Asia.
We have also conducted several rounds of communication and demonstration.
With potential class.
Thank God.
The newer generation off loan management system.
It's cold war by integrating our mature product with innovative technology, such as blockchain robotic process automation.
<unk> called character recognition and facial recognition.
We intended for small and medium sized banking institutions.
As part of that is planned to be launched in Hong Kong in the Southeast Asia region intense HN phase III.
And lastly, <unk>.
And your intention in the recent yes fine.
National institutions.
Salary chips, the creation of an ecosystem that can support digital currency.
Such demand has led for us see objects to lunch scenario based digital cameras application solution.
Leveraging our global survey is delivery capability and our expertise in banking e-commerce payment risk control digital market and the mobile development.
Ah the Iris, it's really enable financial institution schiel, our ecosystem around digital currency.
We are pleased to say that we have successfully completed changed the digital renminbi project for a well known banks in China.
Yeah.
Continuing the advancement in Fintech also bring a higher demand for <unk>, Thailand.
This has always been our commitment to ensure a continuous supply.
Zero overseas and the domestic partnerships.
We are well positioned.
Providing more Iot, Thailand in response to market and the industry demise.
We have partnered with our ideal character Lowball Academy.
Well, Noah probably educational institution in Singapore to provide either location program focused on banking and have impact.
It has been and continuous to be aggressive in the global expansion strategy and implementation.
By continuously expanding our global footprint.
We were able to better serve our international class and attract new ones.
Lodging you increased your overseas revenue.
In particular the hour.
Our revenue from the U S significantly increased by 2000 and 404 this rate plus 1% year on year.
Two zero upon $9 million.
To further drive our business in the U S.
We have appointed Mr. Ross T J nisha as the CEO of CRP as California.
Well also continuing it still take it as they see all of our business entities in the Southeast Asia region.
We saw I draw the future our presence and the business activity is in the key market.
Singapore and the U S will be more active.
We will keep investing and expanding our brand awareness at least to my pace by hiring new management on the business development team.
With this as well I'm confident that our partner and the World class leadership team, you'll capture the significant global growth opportunity well had the full the CRP yes.
Despite the prevailing macro environment.
Such as the challenges we faced due to the impact of COVID-19 Pandemics.
In different areas.
A clear focus on what could be optimized.
Driving operational efficiency, so you're sure that we provide the services our clients need ebay.
And at the same time, a 10 year and profitability and as EQT our growth strategies.
Well staying in constant communication with our clients.
Guaranteed.
Erupted services and they use shorter work efficiency by establishing customize the remote work for our employees.
But more importantly, as always our Paramount we put a high priority on the lifestyle of all our employees you shrugging their safety on the providing them is four eight in affected areas.
In the face of such tremendous opportunity.
Lies ahead of US we will focus on driving both near and long term sustainable growth and profitability.
Well, maintaining our competitive position.
Alrighty IP services and banking.
We also plan to focus more heavily on our wealth management area.
We believe has the potential to be a major revenue source for us going forward.
He kind of materially as it goes through the execution of our streamlined the growth strategies and delivering innovative capabilities to drive shareholder value.
Yeah.
Now I would like to turn the call over to our C. I fully retire to discuss the second half and the full year, all physical attempted Sunday to financial results.
Please go ahead.
Thank you Harry.
I'll now provide an update on our financial performance for the second half and full year, Oh physical 2022. Please.
Please note that all numbers provided I E with Toyota Camry and that all comparisons I made a lot year over year basis.
The second half of fiscal 2022 our revenues increased 12, 3% to 17 States plus one meeting some sixteens they weren't part of the seven meeting.
Increase in revenues was mainly due to an increase in revenues from Ivy consulting and customized solution services.
In particular.
Revenue from our consulting services increased 10, 6% to 72 upon one meaning some 15 style pointed to me.
The increase was due to the inquiries that demand from existing and new clients and our improved capabilities of service delivery.
Revenue from customized IV solutions and services increased 16, seven 9% to three pilots that meaning from two upon one meeting the increase was primarily due to the increased demand from existing and new clients.
Revenue from other services inquiry.
One 9% to 508.9 thousand from 415, 4% and 9000.
The increase was primarily due to the increase the demand for other services, including consulting services.
Perfect. They create a 13, 9% to 18 point instead of a meaning from 'twenty. One pardon me. The decrease was primarily due to the Lockdown you said hey.
Our operations were impacted such as Shanghai. Following the restart is Kobe that Nike tasty and increase the play they can cause.
18 of these eight.
As for operating expenses, selling and marketing expenses they quit.
Seven 2%.
One 8 million from 2 million ads.
Percentage of total revenues.
<unk> and marketing expenses decreased their true coupon of 4% compared to two 9% in the play are paired with.
The decrease was primarily due to a reduced business activity in the state has affected by lockdown in mainland China.
Research and development expenses decreased slightly.
47, 1% to three upon 8 million from 7.2, meaning as a percentage of total revenues.
Research and development expenses decreased two 5% compared to 10, 6% in the play or a parrot.
The decrease was primarily due to the optimization of our R&D stop structure.
Richard Inroad allocating a number of our R&D staff to deliver I guess.
So it says to me that the inquiry that man pharma clients.
General and administrative expenses increased 36, 6% for $13 9 million from $10 2 million.
Percentage of total revenue general and administrative expenses increased to 18, 2% compared to 15% is a pretty appeal at the.
The increase was primarily due to the hiring of management level employees.
To further drive our growth in the overseas market.
The increase of noncash share based compensation expenses.
Oh are you increased in employee salary.
And the increase in depreciation and amortization, resulting from the acquisition of fixed asset in Hong Kong and Singapore.
As a result opens at about operating loss was they'll probably two meaning from operating income.
Three from me.
You can imagine with NEC to their open 2%.
Compared to five 1% in the prior year period.
The decrease was primarily due to the lockdowns in cities.
Our operations were impacted such as Shanghai following the resurgence of COVID-19 cases and increase the prevention costs associated with it.
The hiring of Mac them into level employee to further our growth in the overseas market and is an increase of noncash share based compensation expenses.
Total other income net of other expense well there upon the sale.
The second half of fiscal 2020 two.
Compared to the open two meaning total other expense net of other income in the play a parrot called.
Provision for income taxes increased by one nine to two 2 million from $1 2 million.
Mainly due to a higher effective tax rate at 25%.
The standard data parade corporate income tax rate in mainland China.
By renewing our high and new technology and proprietary data they see out.
Maybe there'll be entitled to a corporate income tax.
Does that put preferential rate also paid 10%.
Net loss was $1 9 million compared to a net income of two upon the 1 million due to play up here.
non-GAAP net income decreased.
Save 10% to two 8 million from five 7 million.
Net loss attributed to see L. P. S calculation shareholders was $1 8 million, Oh, well pointed out eight basic and diluted earnings per share comps.
Compared to net income attributable to see up here and calculations here hold on to me all they opened 11 basically and the del pointed.
And when they look at the annual per share in the play up here right.
non-GAAP net income attributable to see L. P S Corporation.
What COVID-19, Oh, no upon the fortune basic and diluted earnings per share.
<unk> compared to non-GAAP net income attributable to see L. P. S calculations here hold on.
Oh Bioplastics meeting all.
They'll come straight basic and they'll put in 29 diluted earnings per share.
Now I will provide an overview of full year fiscal 2022 results.
For the year I need a June 13, 20 coming true revenues increased 26%.
152 million from $126 1 million.
Increase in revenue was mainly due to increased revenue from <unk> consulting and customize the IQ solution services.
In particular.
And consulting services increased.
17, 8% to 100, either putting fall upon the 1 million from 122 punished ringing the increase was due to the increased demand from existing and new clients and our improved that capability of service delivery.
Revenue from our customized solutions and services increased 152.
10 to 15, 2%.
On the selling meaning from 301 million the increase was primarily due to the increased demand from existing clients.
Revenue from other services increased 81, 2% to $1 2 million from the El Pen 70.
The increase was primarily due to the increased demand for other services, including not I E 2000, So we see it.
Revenue generated outside of mainland China increased by four 1% to $14 1 million from 13.
13.6 million the increase in revenue generated outside of mainland China was primarily due to our revenue growth from the United States market.
Which reflects the company's success and the continued implementation of our global exploration strategy.
Gross profit increased 2% to 41 million from $42 million.
As for operating expense.
Selling and marketing expenses increased them nightclub is 3% to four 1 million from $3 8 million.
The increase was primarily due to year over year increase of sales and marketing staff salary incentive.
As a percentage of the total revenue.
And marketing expenses decreased to two 7% in the fiscal year 2022.
Compared to 3% in the play are pairing the decrease reflects an increase in operational efficiency as a result of it.
Next upscale.
Research and the lachman they expense it decreased 42% to 8 million from the starting point of streaming.
As a percentage of the total revenue.
Research and development expenses decreased to five 2% in the fiscal year 'twenty tiny trip com.
Paired to pinpoint a six person in the play up here at the decrease was primarily due to the optimization of R&D staff structure.
Like involved allocating a number of our R&D staff to deliver services to meet the increased demand from clients.
General and pardon me, taking expenses increased 37, 3% to 23, meaning from the $13 8 million as a percentage of total revenue.
General and Amit <unk> expenses increased to 15.
15, 2% in the fiscal year 2022 compared to 13, 3% in the play are peer right.
The increase was primarily due to the hiring of management level employees to further drive our growth in the overseas market the increase of noncash share based compensation expenses.
Year over year increased employee salaries, and the increase in depreciation and amortization, resulting from the acquisition of fixed assets in Hong Kong and Singapore.
Operating income decreased by 11, 6% to seven 4 million from $8 4 million operating margin was four 9% compared to six 6%.
This was primarily due to the lockdown you say pace that our operations were impacted such as Shanghai. Following the resurgence of COVID-19 cases, and the increase the prevention costs associated with it.
The hiring of management level employees to further drive our growth in the overseas market.
The increase of noncash share based compensation expenses.
Total other income net other expense was there upon the three minute compared to their upon the Onemain total other expense net of other income in the prior year period.
Provision for income taxes increased by one point of sale and me.
So the swing from one 3 million and then they go to a higher effective tax rate at 25%.
Our standard Tetra parade called probably the income tax rate in mainland China.
By renewing our high and new technology Enterprise state her this year.
These will be entitled to a copper the income income tax.
Preferential rate of pay.
10%.
Net income decreased by 34 point.
6% to fall upon 6 million from seven minutes.
non-GAAP net income decreased by three 1% to 11 8 million from <unk> 1 million net.
Net income attributable to see our past in corporation shareholders was four pounds.
Pulp on the phone, meaning are they all kind of tiny one basic and diluted earnings per share.
Compared to net income attributable to see I'll pass in collaborations shareholders think.
And meeting all their upon those 39 basic and diluted earnings per share.
Fiscal year, 2020 one.
non-GAAP net income attributable to see I'll pass them Corporation shareholders was 11 6 million Oh, there upon the 15 six basic and they'll put in the 55 diluted earnings per share.
Compared to non-GAAP net income attributable to us are passing coalition shareholder.
11, nine meeting all their appointed 16, nine basic and they'll punish sick pay eight diluted earnings per share in the fiscal year 2021.
As of June 30, 2022 we had cash and cash equivalents of $18 4 million.
Compared to 24 upon the sale of meeting at 213, 20th anyway.
Net cash provided by operating activities was 3.2 meeting for the 12 months ended June 30th plenty plenty to come.
Compared to net cash used in operating activities.
Two 6 million in the play a parrot.
As of June <unk>, 2022 they had a telephone number of employees.
<unk> thousand 824.
A 14 person, calling for 1% year over year.
As well as we had we have total number okay.
200, and the 16th fired up about 26% year over year.
As P. C. L P sand as a statement of protocol with China Securities Regulatory Communi Commission and the Ministry of Finance of the People's Republic of China regarding all due to excess.
We are cautiously optimistic that this will be a positive step forward to maintain our listing in the NASDAQ market.
Many of them out we've been transparent and compliant with all related to the regulatory agencies.
Showing our commitment to shareholders and other stakeholders.
Looking forward for fiscal year, 'twenty kind of history.
Considering our financial numbers could be affected by the floating S can do it and absent material acquisitions, all nonrecurring transaction.
We expanded total sales growth in the range of products to like 20% to 25% and non-GAAP net income growth in the rent.
Is it like 22% to tenants down 1% compared to fiscal year 2022 financial results.
This concludes our prepared remarks operator.
We are now ready for questions.
Thank you if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please ensure the mute function on your telephone is switched off.
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Please limit yourself to one question and if you have a follow up please queue again.
That is star one if you do wish to ask a question at this time.
Pause for just a moment.
What are you to signal for questions.
I will now take our first question from Thomas Fernandez Private Investor. Please go ahead.
I just had a question on any updates on the electrical vehicle customer you had.
Announced in the past any any further progress on that.
Yeah.
Okay, Let me take your question.
We have always put our automobile area as one of our fault bigger revenue sources in a physical yard time, they tended to revenue from when they do and we are encouraged to buy plenty when they call them. They want to send it to 10.4 million all states are poised to 8%.
Oh, we've got total revenue looking forward, we are committed to bringing more business. The last member with existing clients as well as attack the new clients on the tablet.
And the temperatures are going be a growing business opportunities in.
And electronic vehicle market.
He'll foil patching.
Thank you.
And once again it is star one if you do wish to ask a question at this time.
And as a final reminder, it is star one.
To ask a question.
Please ensure your phone is on music.
Signal to reach our equipment.
This does conclude today's Q&A session I would now like to hand, the call back to management for closing remarks.
Hi, Henry Please go on with the closing remarks.
Sorry, Okay right.
Please proceed with your closing remarks now.
Okay. Thank you again for joining us on today's call and we appreciate your ongoing so Paul when you look forward to updating you on our progress in the weeks and months ahead, our good days.
This concludes today's call. Thank you for your participation you may now disconnect.
Okay.
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