CLPS Navigates Intense Competition, Economic Headwinds in 2025 20-F

Ticker: CLPS · Form: 20-F · Filed: Oct 17, 2025 · CIK: 1724542

Sentiment: bearish

Topics: IT Services, China Market, Competitive Risk, Client Concentration, Currency Risk, Talent Acquisition, Emerging Markets

Related Tickers: CLPS

TL;DR

**CLPS is swimming in a shark tank of competition and economic uncertainty, making its growth prospects a high-stakes gamble.**

AI Summary

CLPS Inc. filed its 20-F for the fiscal year ended June 30, 2025, indicating a continued focus on its IT services business. The filing highlights several key risks, including intense competition from both onshore and offshore IT services companies, which could lead to client loss and revenue decline. The company also faces challenges in managing growth effectively, attracting and retaining highly skilled personnel, and the potential for reduced client purchases and increased pricing pressure due to adverse economic environments in China or globally. A significant portion of CLPS's revenue is derived from a relatively small number of major clients, making the loss of any of these clients a substantial risk to its business. The company's profitability is also sensitive to maintaining resource utilization levels and accurately estimating costs for fixed-price projects. Fluctuations in the value of the Renminbi and other currencies are noted as a material adverse effect on investment value and business operations. The filing does not provide specific revenue or net income figures, but emphasizes operational and market risks.

Why It Matters

This 20-F filing is crucial for investors as it outlines the significant operational and market risks CLPS faces, particularly its reliance on a few major clients and the competitive landscape in IT services. For employees, the challenges in attracting and retaining skilled personnel could impact job security and growth opportunities. Customers might see pricing pressures or service disruptions if CLPS struggles with resource management or economic downturns. In the broader market, CLPS's performance reflects trends in the global IT outsourcing sector, especially concerning competition from both domestic and international players, and the impact of currency fluctuations on cross-border operations.

Risk Assessment

Risk Level: high — The risk level is high due to CLPS's stated reliance on a 'relatively small number of major clients,' making it highly vulnerable to client loss. Furthermore, the company explicitly mentions 'intense competition from onshore and offshore IT services companies' and the potential for 'adverse changes in the economic environment' to reduce client purchases and increase pricing pressure, directly impacting revenues and profitability.

Analyst Insight

Investors should exercise caution and conduct thorough due diligence on CLPS's client concentration and competitive positioning. Monitor economic indicators in China and globally, as well as the company's ability to retain key clients and skilled talent, before making any investment decisions.

Key Numbers

Key Players & Entities

FAQ

What are the primary business risks for CLPS Inc. according to its 20-F filing?

CLPS Inc. faces primary business risks including intense competition from onshore and offshore IT services companies, potential inability to manage growth effectively, challenges in attracting and retaining skilled personnel, and significant reliance on a relatively small number of major clients, as detailed in its 20-F filing.

How does CLPS Inc.'s client concentration affect its business?

CLPS Inc.'s business is significantly affected by client concentration, as a 'significant portion of our revenues' is generated from 'a relatively small number of major clients.' The loss of business from any of these key clients could substantially reduce CLPS's revenues and harm its overall business.

What is the impact of economic conditions on CLPS Inc.'s operations?

Adverse changes in the economic environment, both in China and globally, could materially and adversely affect CLPS Inc.'s revenues and results of operations by reducing client purchases and increasing pricing pressure on its IT services.

What are the challenges CLPS Inc. faces in talent management?

CLPS Inc. faces challenges in talent management due to 'intense competition for highly skilled personnel.' This could lead to a failure to attract and retain enough sufficiently trained staff, negatively impacting its ability to bid for new projects and potentially causing revenue decline.

How do currency fluctuations affect CLPS Inc.?

Fluctuations in the value of the Renminbi and other currencies may have a material adverse effect on the value of investments in CLPS Inc. and could adversely affect its business and the value of its securities, as its functional currency is Renminbi and reporting currency is U.S. dollar.

What is CLPS Inc.'s strategy for growth and acquisitions?

CLPS Inc.'s growth and success depend on its ability to anticipate and develop new services, enhance existing ones, and potentially enter into strategic alliances or acquire suitable companies. However, the filing notes risks if it is 'unsuccessful in entering into strategic alliances or identifying and acquiring suitable acquisition candidates,' which could impede growth.

What are the risks associated with CLPS Inc.'s fixed-price projects?

A portion of CLPS Inc.'s income is generated on a fixed-price project basis. The risk is that the company 'may not be able to accurately estimate costs and determine resource requirements' for these projects, which could lead to reduced margins and overall profitability.

What is the significance of the 29,743,452 shares outstanding for CLPS Inc.?

As of October 6, 2025, CLPS Inc. had 29,743,452 shares outstanding. This number is significant for investors as it represents the total number of common shares in circulation, impacting per-share metrics and market capitalization.

What is CLPS Inc.'s approach to intellectual property protection?

CLPS Inc. faces risks related to intellectual property, including the inability to prevent unauthorized use of its own intellectual property, which could harm its business and competitive position. It also faces potential liability for intellectual property infringement claims from third parties, which could be costly to defend.

What is the role of the U.S. Federal Reserve Board in CLPS Inc.'s financial reporting?

The U.S. Federal Reserve Board's H.10 statistical release is cited by CLPS Inc. for the noon buying rate of RMB 7.1636 to USD1.00 on June 30, 2025. This rate is used for translating certain foreign currency amounts into U.S. dollars for the convenience of the reader in its Annual Report.

Risk Factors

Industry Context

CLPS Inc. operates in the IT services sector, facing intense competition from both domestic (onshore) and international (offshore) providers. The industry is characterized by rapid technological changes and a high demand for skilled personnel. Companies in this space must continuously adapt their service offerings and manage talent effectively to remain competitive.

Regulatory Implications

As a foreign private issuer filing with the SEC, CLPS Inc. must comply with U.S. securities regulations. Additionally, its operations in the PRC are subject to Chinese laws and regulations, which can impact business practices, data handling, and market access.

What Investors Should Do

  1. Monitor client concentration
  2. Assess competitive landscape
  3. Evaluate talent management
  4. Analyze currency exposure

Glossary

20-F
An annual report required by the U.S. Securities and Exchange Commission (SEC) for foreign private issuers that are registered with the SEC. (This document provides a comprehensive overview of CLPS Inc.'s business, financial condition, and risks for the fiscal year ended June 30, 2025.)
PRC
The People's Republic of China. (CLPS Inc. operates significantly within China, making the economic and regulatory environment of the PRC a key factor in its business operations and risks.)
Renminbi
The official currency of the People's Republic of China. (Fluctuations in the Renminbi's exchange rate against other currencies, like the USD, are identified as a material risk to CLPS's financial performance and investment value.)

Year-Over-Year Comparison

This 20-F filing for the year ended June 30, 2025, continues to highlight persistent risks such as intense competition, client concentration, and personnel challenges, which were likely also present in the previous filing. While specific financial metrics for comparison are not provided in the excerpt, the emphasis on these operational and market risks suggests a consistent, albeit challenging, operating environment for CLPS Inc.

Filing Stats: 4,559 words · 18 min read · ~15 pages · Grade level 11.7 · Accepted 2025-10-17 09:21:40

Key Financial Figures

Filing Documents

Item 18

Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No Table of Contents Page PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 1 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 1 ITEM 3. KEY INFORMATION 1 ITEM 4. INFORMATION ON THE COMPANY 43 ITEM 4A. UNRESOLVED STAFF COMMENTS 80 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECT 80 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 103 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 112 ITEM 8. FINANCIAL INFORMATION 116 ITEM 9. THE OFFER AND LISTING 117 ITEM 10. ADDITIONAL INFORMATION 117 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 124 ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 124 PART II ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 125 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 125 ITEM 15.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 125 ITEM 16. RESERVED 125 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT 125 ITEM 16B. CODE OF ETHICS 125 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES 126 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 126 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 126 ITEM 16F. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT 126 ITEM 16G. CORPORATE GOVERNANCE 126 ITEM 16H. MINE SAFETY DISCLOSURE 126 ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 126 ITEM 16J. INSIDER TRADING POLICIES 126 ITEM 16K. CYBERSECURITY 127 PART III ITEM 17.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 128 ITEM 18.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 128 ITEM 19. EXHIBITS 129 i CERTAIN INFORMATION Unless otherwise indicated, numerical figures included in this Annual Report on Form 20-F (the "Annual Report") have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. For the sake of clarity, this Annual Report follows the English naming convention of first name followed by last name, regardless of whether an individual's name is Chinese or English. Certain market data and other statistical information contained in this Annual Report are based on information from independent industry organizations, publications, surveys and forecasts. Some market data and statistical information contained in this Annual Report are also based on management's estimates and calculations, which are derived from our review and interpretation of the independent sources listed above, our internal research and our knowledge of the PRC information technology industry. While we believe such information is reliable, we have not independently verified any third-party information and our internal data has not been verified by any independent source. Depending on the context, the terms "we," "us," "our company," and "our" refer to CLPS Incorporation, a Cayman Islands company, and its subsidiary and affiliated companies. Except where the context otherwise requires and for purposes of this Annual Report only: "Arabian Jasmine" refers to Arabian Jasmine Ltd., a British Virgin Islands company; "Badou Tech" refers to Badou Tech Pte. Ltd., a Singapore company; "Beijing Bozhuo" refers to Beijing Bozhuo Education Technology Co., Ltd., a PRC company; "CAE" refers to College of Allied Educators Pte. Ltd., a Singapore company; "CareerWin" refers to CareerWin Executive Search Co., Ltd., a PRC company; "CLPS Beijing" refers to CLPS Beijing Hengtong Co., Ltd., a PRC company; "CLPS California" refers t

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This Annual Report contains "forward-looking statements" that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are "forward-looking statements" including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management's beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as "may", "will", "should", "could", "would", "predicts", "potential", "continue", "expects", "anticipates", "future", "intends", "plans", "believes", "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking These statements are necessarily or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based for the success of our business.

Forward-looking statements

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management's belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings "Risk Factors", "Operating and Financial Review and Prospects," "Information on the Company" and elsewhere in this Annual Report. This Annual Report should be read in conjunction with our audited financial statements and the accompanying notes thereto, which are included in Item 18 of this Annual Report. v PART I

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not required.

OFFER STATISTICS AND EXPECTED TIMETABLE

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not required.

KEY INFORMATION

ITEM 3. KEY INFORMATION A. [Reserved] B. Capitalization and Indebtedness Not required. C. Reasons for the Offer and Use of Proceeds Not required. 1 D. Risk factors You should carefully consider the following risk factors, together with all of the other information included in this Annual Report. Investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this Annual Report before making an investment decision. The risks and uncertainties described below represent our known material risks to our business. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, you may lose all or part of your investment. A summary of risk factors is provided concisely below: Risks Related to Our

Business

Business We may be unable to effectively manage our growth, which could place significant strain on our management personnel, systems and resources. We may not be able to achieve anticipated growth, which could materially and adversely affect our business and prospects. Adverse changes in the economic environment, either in China or globally, could reduce our clients' purchases from us and increase pricing pressure, which could materially and adversely affect our revenues and results of operations. We face intense competition from onshore and offshore IT services companies, and, if we are unable to compete effectively, we may lose clients, and our revenues may decline. Due to intense competition for highly skilled personnel, we may fail to attract and retain enough sufficiently trained personnel to support our operations; as a result, our ability to bid for and obtain new projects may be negatively affected and our revenues could decline. Our success depends substantially on the continuing efforts of our senior executives and other key personnel, and our business may be severely disrupted if we lose their services. We generate a significant portion of our revenues from a relatively small number of major clients and loss of business from these clients could reduce our revenues and significantly harm our business. If we are unable to collect our receivables from our clients, our results of operations and cash flows could be adversely affected. The growth and success of our business depends on our ability to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology and in the industries we focus on. We may be unsuccessful in entering into strategic alliances or identifying and acquiring suitable acquisition candidates, which could impede our growth and negatively affect our revenues and net income. If we fail to integrate or manage acquired companies efficiently, or if the acquired compa

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