NEW YORK, Oct. 07, 2026 (GLOBE NEWSWIRE) -- Lucas GC Limited (NASDAQ: LGCL) (“Lucas” or the “Company”), an artificial intelligence (the “AI”) technology-driven Platform-as-a-Service (the “PaaS”) company, applying such technologies in human resources and insurance industry verticals today announced its financial results for 1H fiscal year of 2026.

1H 2026 Financial Highlights

• Our revenue was RMB245.3 million (US$35.7 million) for the six months ended June 30, 2026, compared with RMB386.9 million for the six months ended June 30, 2025, representing a decrease of 36.6%.
  
• We recorded a gross margin of 35.4% for the six months ended June 30, 2026, representing an increase of 1.7% compared with that of the six months ended June 30, 2025.
  
• We recorded net income of RMB19.9 million (US$2.9 million) for the six months ended June 30, 2026, compared with RMB21.5 million for the six months ended June 30, 2025.
  
• Our net income margin increased to 8.0% for the six months ended June 30, 2026, compared with 5.5% for the six months ended June 30, 2025.

Management Commentary

Howard Lee, Chief Executive Officer of Lucas, said: “Our first-half performance highlights the success of our ongoing pivot from providing traditional service into higher value-added technology services. While macroeconomic headwinds in China and our strategic shift from lower-margin contracts impacted top-line revenue, our focus on higher-margin product lines and expansion delivered remarkable bottom-line expansion. In return, our gross margin expanded by 1.7% to 35.4%, while net income decreased slightly by 7.6% year-over-year to RMB19.9 million, with a net margin of 8.0%.”

Comparison of Interim Financial Results for the six months ended June 30, 2025 and 2026

The following table summarizes the results of our operations during the six months ended June 30, 2025 and 2026, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

Revenues

Our revenues decreased by approximately RMB141.6 million, or 36.6%, from RMB386.9 million for the six months ended June 30, 2025 to RMB245.3 million (US$35.7 million) for the six months ended June 30, 2026, primarily due to a decrease of revenues from outsourcing service. The following table sets forth a breakdown of our revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated:

Revenues from recruitment services decreased by RMB5.5 million, or 17.4%, from RMB31.8 million for the six months ended June 30, 2025 to RMB26.3 million (US$3.8 million) for the six months ended June 30, 2026. Broader macroeconomic headwinds led corporate customers to exercise caution regarding headcount growth, resulting in lower volume for traditional recruitment placements as clients increasingly favored outsourced workforce solutions.

Revenues from outsourcing services decreased by approximately RMB120.8 million, or 36.1%, from RMB334.5 million for the six months ended June 30, 2025 to RMB213.7 million (US$31.1 million) for the six months ended June 30, 2026. The decrease was primarily driven by a reduction in corporate customer demand, as customers exercised spending discipline and deferred investments in custom IT systems, process automation, and labor-optimization projects. To mitigate these top-line headwinds, management focused on optimizing our service mix by prioritizing toward higher-value technology solutions during the period.

Revenues from other services decreased by RMB15.3 million, or 74.0%, from RMB20.6 million for the six months ended June 30, 2025 to RMB5.4 million (US$0.8 million) for the six months ended June 30, 2026. The decrease was mainly due to softened demand for non-core information technology services as clients exercised budget discipline amid a challenging economic climate.

Cost of revenues

Our cost of revenues decreased by approximately RMB98.0 million, or 38.2%, from RMB256.4 million for the six months ended June 30, 2025 to RMB158.4 million (US$23.1 million) for the six months ended June 30, 2026, which was mainly due to the decrease in outsourcing service, which had higher cost. The following table sets forth a breakdown of our cost of revenues by revenue streams, expressed as an absolute amount and as a percentage of the total revenues, for the periods indicated.

Cost related to recruitment services decreased by approximately RMB5.2 million, or 28.9%, from RMB17.9 million for the six months ended June 30, 2025 to RMB12.7 million (US$1.9 million) for the six months ended June 30, 2026, primarily due to the decrease of revenues in recruitment service.

Cost related to outsourcing services decreased by approximately RMB82.3 million, or 36.6%, from RMB224.7 million for the six months ended June 30, 2025 to RMB142.5 million (US$20.8 million) for the six months ended June 30, 2026, primarily attributable to the decline in active outsourcing project volume, which reduced direct operational expenditures, including fees paid to third-party partners.

Cost related to other services decreased by approximately RMB10.5 million, or 76.5%, from RMB13.7 million for the six months ended June 30, 2025 to RMB3.2 million (US$0.5 million) for the six months ended June 30, 2026, primarily in line with the decrease in other services.

Gross profits and margin

The following table sets forth a breakdown of our gross profit, margin by revenue streams, expressed as an absolute amount and as a percentage of their corresponding revenues for the periods indicated.

As a result of the foregoing, we recorded a gross profit of RMB130.5 million and RMB86.9 million (US$12.7 million) for the six months ended June 30, 2025 and 2026, respectively. Moreover, our strategic transit from pursuing revenue scale expansion to driving value optimization through gross margin enhancement, attributable to slightly gross profit margin increase from 33.7% to 35.4% in 2025 and 2026, respectively.

Operating expenses

Our operating expenses decreased from RMB115.2 million for the six months ended June 30, 2025 to RMB61.0 million (US$8.9 million) for the six months ended June 30, 2026, representing a decrease of 47.0%, primarily due to the following:

General and administrative expenses

Our general and administrative expenses decreased by 54.1% from RMB38.8 million for the six months ended June 30, 2025 to RMB17.8 million (US$2.6 million) for the six months ended June 30, 2026, which was primarily due to the decrease of RMB22.6 million (US$3.3 million) in user support operation expenses, for which we were able to normalize support spending and optimizing administrative overhead.

Research and development expenses

Our research and development expenses decreased by 47.7% from RMB45.9 million for the six months ended June 30, 2025 to RMB24.0 million (US$3.5 million) for the six months ended June 30, 2026. This reduction was primarily attributable to engineering efficiencies gained from our prior-period platform investments, which reduced the need for major AI model updates during the period. We will continue allocating capital toward high-ROI technology initiatives to support long-term commercialization and margin expansion.

Selling and marketing expenses

Our selling and marketing expenses decreased by 37.2% from RMB30.6 million for the six months ended June 30, 2025 to RMB19.2 million (US$2.8 million) for the six months ended June 30, 2026, which was mainly due to our commercial strategy toward margin optimization and organic client retention. Leveraging strong recurring relationships with returning corporate customers allowed us to streamline customer acquisition expenditure while continuing to serve the high-value enterprise accounts that power our core outsourcing business.

Other income/(expenses), net

Total other expenses, net increased by 235.5% from RMB0.4 million for the six months ended June 30, 2025 to RMB1.4 million (US$0.2 million) for the six months ended June 30, 2026.

Financial expenses mainly consist of interest income and expenses, bank charges and exchange gain or loss. Our financial expenses, net increased from RMB0.3 million for the six months ended June 30, 2025 to RMB1.4 million (US$0.2 million) for the six months ended June 30, 2026 primarily due to the increased bank interest expenses from 1.0 million for the six months ended June 30, 2025 to 1.5 million for the six months ended June 30, 2026; and the increase is offset by the exchange gain, which decreased from 0.7 million for the six months ended June 30, 2025 to 0.07 million for the six months ended June 30, 2026.

Income tax benefits (expenses)

We recorded an income tax expense of RMB4.6 million (US$0.7 million) for the six months ended June 30, 2026, compared to an income tax benefit of RMB6.6 million for the six months ended June 30, 2025. This swing from a tax benefit to a tax expense was primarily attributable to the utilization of net operating loss carryforwards as profitability improved, alongside adjustments to recognized deferred tax assets associated with R&D tax credit incentives and prior-year loss carryforwards.

Net income

As a result of the foregoing, our net income decreased slightly by RMB1.6 million, from RMB21.5 million for the six months ended June 30, 2025 to RMB19.9 million (US$2.9 million) for the six months ended June 30, 2026.

Cash Flow

As of June 30, 2026, we had cash and cash equivalents of RMB10.4 million (US$1.5 million). The following table sets forth a summary of cash flows for the periods indicated:

Cash flows from operating activities

For the six months ended June 30, 2026, our net cash provided by operating activities was RMB8.3 million (US$1.2 million), which was primarily attributable to (i) net income of RMB19.9 million (US$2.9 million), primarily adjusted for depreciation of software and equipment of RMB9.8 million (US$1.4 million) and provision of expected credit losses of RMB3.2 million; (ii) an increase in advances to suppliers of RMB44.5 million (US$6.5 million), primarily due to increased upfront payments made to secure critical capacity and vendor resources for ongoing IT outsourcing deployments; (iii) an increase in accounts receivable of RMB76.9 million (US$11.2 million), primarily driven by a concentration of project completions and customer billings toward the end of the second quarter for which collections remain outstanding; (iv) an increase in accounts payable of RMB74.9 million (US$10.9 million) due to the timing of vendor settlements near the end of the interim period; and (v) an increase in contract liabilities of RMB17.3 million (US$2.5 million) due to the additional cash prepayments collected from customers in advance of product delivery and milestone completions.

For the six months ended June 30, 2025, our net cash provided by operating activities was RMB4.3 million, which was primarily attributable to (i) net income of RMB21.5 million, primarily adjusted for depreciation of software and equipment of RMB5.7 million and provision of expected credit losses of RMB3.2 million; (ii) an increase in prepaid expenses and other current assets of RMB5.0 million; (iii) an increase in deferred tax assets of RMB6.6 million, driven by expanded R&D expenditure and tax loss carryforwards; and offset by (iv) a decrease in accounts receivable of RMB10.7 million, reflecting cash collections from clients on outstanding balances during the period; (v) a decrease in accounts payable of RMB18.7 million, resulting from the timely settlement and payment of outstanding vendor balances; and (vi) a decrease in contract liabilities of RMB8.1 million, primarily due to the recognition of unearned revenue as performance obligations were fulfilled for advance customer prepayments.

Investing activities

For the six months ended June 30, 2026, our net cash used in investing activities was RMB309.6 million (US$45.1 million), which was primarily due to (i) purchase of software and equipment of RMB6.6 million (US$1.0 million); (ii) purchase of research development of RMB23.6 million (US$3.4 million); and (iii) deposits for investment in partnership entities of RMB279.4 million (US$40.7 million).

For the six months ended June 30, 2025, our net cash used in investing activities was RMB68.8 million, which was primarily due to (i) purchase of software and equipment of RMB29.5 million; (ii) purchase of research development of RMB19.2 million; and (iii) deposits for investment in partnership entities of RMB21.5 million.

Financing activities

For the six months ended June 30, 2026, our net cash provided by financing activities was RMB284.8 million (US$41.5 million), which was primarily attributable to (i) proceeds from short-term borrowings of RMB47.0 million (US$6.8 million); (ii) sale of ordinary shares through private placement of RMB280.0 million (US$40.8 million); and offset by (iii) repayment of short-term borrowing of RMB44.0 million (US$6.4 million).

For the six months ended June 30, 2025, our net cash provided by financing activities was RMB63.4 million, which was primarily attributable to (i) proceeds from short-term borrowings of RMB55.0 million; (ii) sale of public shares through public offering of RMB43.6 million; offset by (iii) repayment of short-term borrowing of RMB31.7 million; (iv) payments of offering costs related to follow-on offering of RMB1.3 million; and (v) repayment to a related party of RMB2.3 million.

About Lucas GC Limited

With 24 granted U.S. and Chinese patents and over 75 registered software copyrights in AI, data analytics and blockchain technologies, Lucas GC Limited is an AI technology-driven PaaS company, applying such technologies in human resources and insurance industry verticals. For more information, please visit: www.lucasgc.com.

Forward-Looking Statements

Statements in this press release about future expectations, plans, and prospects, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements.” The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the uncertainties related to market conditions. Any forward-looking statements contained in this press release speak only as of the date hereof, and Lucas GC Limited specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

For Investor Inquiries and Media Contact:

https://www.lucasgc.com/
ir@lucasgc.com
T: 818-741-0923

*The shares and per share information are presented on a retroactive basis to reflect the reorganization, the stock consolidation on October 13, 2025 and the dual-class share structure.