CLPS Incorporation (CLPS) Announces Chairman's Letter to the Company's Shareholders

March 12, 2021 8:31 AM EST

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CLPS Incorporation (Nasdaq: CLPS) ("CLPS" or "the Company"), today released a letter to shareholders from the Chairman of the Company's Board of Directors (the "Board"), the full text of which is provided below. All CLPS shareholders are encouraged to read it.

Dear Shareholders,

I am pleased to announce that CLPS continues to grow in an upwards trajectory as evidenced by the solid financial results for the first half of fiscal year 2021. Going forward, we are determined to maintain our strong growth momentum by investing in IT service resources, such as on-demand products and cutting-edge technology. In addition, the development of new businesses within and outside our industry scope will be an attribute to our growth. This initiative roadmap will further improve our competitive advantage towards providing high quality IT services, with focused on working at the client's digital and corporate strategy level.

I am thrilled to discuss our streamlined strategy and development expectation for the rest of fiscal year 2021.

1. Business Development

In the first half of fiscal year 2021 financial results, we outperformed our previous fundamentals pushing our revenue in an upward trend by 37.0% YoY due to the continued demand for IT services. In addition, our improved operating efficiency has resulted to an increase of 213.5% in operating profit and 114.9% in net income YoY.

For the remainder of the fiscal 2021, CLPS will give full play to its global expansion strategy in exploring business opportunities in the overseas market. We will also leverage the delivery capacity of our overseas entities to progressively expand our IT services in Southeast Asia, Japan, U.S., and other potential geographic market. In Mainland China, we plan to actively develop partnership with companies focused on fintech industry and with business reach across domestic and overseas market to help enterprises address challenges using cutting-edge technologies. By leveraging each other's advantages and resources, the result of the collaborative approach is expected to translate to an improved financial performance. With our aggressive growth pipeline, we forecast a 30% to 35% increase in revenue and an adjusted non-GAAP net income increase of 60% to 65% for the whole year of fiscal 2021.

2. Continuous Research and Development

Our ultimate goal to enable the digital transformation journey of our clients all starts with the CLPS Innovation Lab's efforts in the research and application of innovative technologies, including big data, cloud computing, robotic process automation (RPA), and artificial intelligence (AI), among others. These innovative technologies are designed as the backbone for developing comprehensive application scenarios to achieve operational efficiency and client satisfaction.

3. Talent Supply

We constantly give priority on the development and cultivation of IT talents to meet the needs for financial IT services and solutions of our global clients. Holding on our global expansion strategy, the talent training programs will be further expanded to overseas, such as in Hong Kong and Singapore. Under the Talent Creation Program (TCP) in banking, insurance and other financial fields, the introduction of more training subject domains is also in the pipeline, of which some are customized based on the client's demand. As a result, it will provide us with strong foundation to be a leader in professional IT training.

4. Mergers and Acquisitions

In the second half of fiscal 2021, our M&A efforts will be focused on companies with business model similar or complementary to CLPS's core business. In Mainland China, our target company focuses in innovative solutions provider utilizing cutting-edge technology. In terms of overseas M&A, we plan on expanding our global network to penetrate potential clients. The target areas include Southeast Asia and the U.S.

Through active mergers and acquisitions, we expect to generate new growth engines and promote diversified business model development in our endeavor towards exploration of other business areas.

5. Financing

On March 3, 2021, we successfully closed the $16 million registered direct offering at a price of $6 per share. The offering will support our future development in global expansion, research and development, and talent development. In addition, the offering is also intended for general corporate and capital purposes, which will allow us to achieve healthier fundamentals and bring long term value to our shareholders.

Summing up the growth strategy in the fiscal year 2021, CLPS is committed to bringing industry standard and high quality IT services to our clients while ensuring shareholders that we deliver excellent corporate governance and outstanding performance. As we embark to the next chapter of our growth, I would like to extend my deep gratitude to our employees, partners, and shareholders for the unwavering support and confidence to CLPS.

I sincerely and continuously wish you safety, good health, and a nice day!

With sincerity and determination,

Xiao Feng YangChairman of the BoardCLPS Incorporation

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