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HomeBusinessResearch Solutions Reports Fiscal Second Quarter 2024 Results

Research Solutions Reports Fiscal Second Quarter 2024 Results

Reports 18.3% Revenue Increase and ARR of $15.6 Million

HENDERSON, Nev., Feb. 8, 2024 /PRNewswire/ — Research Solutions, Inc. (NASDAQ: RSSS), a trusted partner providing cloud-based workflow solutions to accelerate research for R&D-driven organizations, reported financial results for its fiscal second quarter ended December 31, 2023.

Fiscal Second Quarter 2024 Summary

  • Total revenue of $10.3 million, an 18.3% increase from the prior-year quarter
  • Platform revenue up 48% to $3.1 million. Annual Recurring Revenue (“ARR”) up 77% to $15.6 million, which includes approximately $4.0 million of B2C recurring revenue and $0.4M of B2B recurring revenue from the Scite, Inc. (“Scite”) acquisition.  B2C ARR is broken out on a separate line in the Company’s Financial and Operational Summary Tables and for the purposes of calculating B2C ARR, the value of any monthly recurring subscriptions has been multiplied by twelve (see the Financial and Operational Summary Tables and associated notes below).
  • Gross profit up 31.7% from the prior-year quarter. Total gross margin improved 450 basis points to 43.5%.
  • Net loss of $54,000 or ($0.00) on a per share basis, compared to a net loss of ($256,000) or ($0.01) per share in the prior-year quarter. The quarter’s loss includes $307,000 in expenses related to M&A activities, most of which were legal expenses.
  • Adjusted EBITDA of $318,000 compared to $201,000 in the prior-year quarter.  The Adjusted EBITDA result is inclusive of the expenses related to M&A activities noted above.  Without these costs, Adjusted EBITDA would have been approximately $625,000.
  • The company closed its acquisition of Scite on December 1, 2023. The quarter’s numbers include approximately one month of activity from Scite.

“Our second quarter results reflect the continued execution of our plan and with the acquisition of Scite our ARR is now approximately $15.6 million.  We also experienced continued organic growth across our platform and transaction offerings, with net incremental ARR on the Article Galaxy platform being our best result in the last four quarters,” said Roy W. Olivier, President and CEO of Research Solutions. “In addition, we have greatly enhanced the offerings available within our Article Galaxy platform over the past six months with the addition of ResoluteAI and Scite. When combined with our existing products, these acquisitions add multiple new workflow and advanced search and discovery solutions that can be sold to new or existing customers.  These new solutions materially increase our Total Addressable Market (“TAM”) and as we further integrate the products together, we will be able to deliver unique value to our customers. Overall, we remain a critical piece of the research process and believe we are well-positioned to expand our user base as macroeconomic conditions improve.” 

Fiscal Second Quarter 2024 Results

Total revenue was $10.3 million, an 18% increase from $8.7 million in the year-ago quarter as both platform and transaction revenue increased from the prior-year period.

Platform subscription revenue increased 48% to $3.1 million compared to $2.1 million in the year-ago quarter. The increase was primarily due to the acquisitions of ResoluteAI and Scite, as well as organic growth in the core Article Galaxy platform. The quarter ended with annual recurring revenue of $15.569 million, up 77% year-over-year, including approximately $4.355 million of ARR from Scite (see the company’s definition of annual recurring revenue below).

Transaction revenue was $7.2 million, compared to $6.6 million in the second quarter of fiscal 2023. The increase was primarily due to organic growth, which was also enhanced by higher transaction volumes related to contracts transferred from FIZ Karlsruhe effective on January 1, 2023. The transaction customer count for the quarter was 1,398, compared to 1,223 customers in the prior-year quarter (see the company’s definition of active customer accounts and transactions below).

Total gross margin improved 450 basis points from the prior-year quarter to 43.5%. The increase was primarily driven by the continued revenue mix shift to the higher-margin Platforms business, as well as increased margins in the transactions business.

Total operating expenses were $4.9 million, compared to $3.7 million in the second quarter of 2023. The increase was primarily related to the additional expense base associated with the acquisitions of ResoluteAI and Scite.  Additionally, this quarter’s results include $307,000 in expenses related to M&A activities, the vast majority of which were legal expenses.

Net loss in the second quarter was $54,000, or roughly breakeven on a per share basis, compared to a net loss of ($256,000), or ($0.01) per share, in the prior-year quarter. Adjusted EBITDA was $318,000, compared to $201,000 in the year-ago quarter.  The Adjusted EBITDA result is inclusive of the $307,000 in M&A activity related costs noted above (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

Conference Call

Research Solutions President and CEO Roy W. Olivier and CFO Bill Nurthen will host the conference call, followed by a question and answer period.

Date: Thursday, February 8, 2024
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-412-317-5180
Conference ID: 10185927

The conference call will be broadcast live and available for replay until March 8, 2024 by dialing  1-412-317-6671 and using the replay ID 10185927, and via the investor relations section of the company’s website at http://researchsolutions.investorroom.com/.

Fiscal Second Quarter Financial and Operational Summary Tables vs. Prior-Year Quarter



Quarter Ended December 31,


Six Months Ended December 31,



2023

2022

Change

% Change


2023

2022

Change

% Change

Revenue:











Platforms

$   3,125,584

$ 2,110,272

$  1,015,312

48.1 %


$   5,725,776

$   4,130,239

$  1,595,537

38.6 %


Transactions

$   7,188,158

$ 6,606,394

581,764

8.8 %


$ 14,648,937

$ 13,271,070

1,377,867

10.4 %

Total Revenue

10,313,742

8,716,666

1,597,076

18.3 %


20,374,713

17,401,309

2,973,404

17.1 %











Gross Profit:











Platforms

2,639,399

1,857,199

782,200

42.1 %


4,856,977

3,646,693

1,210,284

33.2 %


Transactions

1,844,403

1,546,628

297,775

19.3 %


3,658,391

3,106,382

552,009

17.8 %

Total Gross Profit

4,483,802

3,403,827

1,079,975

31.7 %


8,515,368

6,753,075

1,762,293

26.1 %











Gross profit as a % of revenue:











Platforms

84.4 %

88.0 %

-3.6 %



84.8 %

88.3 %

-3.5 %



Transactions

25.7 %

23.4 %

2.2 %



25.0 %

23.4 %

1.6 %


Total Gross Profit

43.5 %

39.0 %

4.4 %



41.8 %

38.8 %

3.0 %












Operating Expenses:











Sales and marketing

804,927

666,608

138,319

20.7 %


1,489,943

1,187,824

302,119

25.4 %


Technology and product development

1,336,558

922,132

414,426

44.9 %


2,581,137

1,797,422

783,715

43.6 %


General and administrative

2,023,848

1,613,664

410,184

25.4 %


4,566,717

3,133,088

1,433,629

45.8 %


Depreciation and amortization

155,749

6,342

149,407

2355.8 %


215,369

12,154

203,215

1672.0 %


Stock-based compensation

596,455

608,703

(12,248)

-2.0 %


1,188,269

784,064

404,205

51.6 %


Foreign currency translation loss

(13,738)

(84,179)

70,441

83.7 %


(7,118)

(11,663)

4,545

39.0 %

Total Operating Expenses

4,903,799

3,733,270

1,170,529

31.4 %


10,034,317

6,902,889

3,131,428

45.4 %

Income (loss) from operations

(419,997)

(329,443)

(90,554)

-27.5 %


(1,518,949)

(149,814)

(1,369,135)

-913.9 %











Other Income (Expenses):











Other income

376,426

74,695

301,731

404.0 %


516,737

113,764

402,973

354.2 %


Provision for income taxes

(10,057)

(782)

(9,275)

1186.1 %


(39,459)

(4,915)

(34,544)

702.8 %

Total Other Income (Expenses):

366,369

73,913

292,456

395.7 %


477,278

108,849

368,429

338.5 %

Net income (loss)

$       (53,628)

$   (255,530)

201,902

79.0 %


$  (1,041,671)

$       (40,965)

(1,000,706)

-2442.8 %










NM

Adjusted EBITDA

$       318,469

$     201,423

$      117,046

58.1 %


$     (122,429)

$       634,741

$    (757,170)

NM














Quarter Ended December 31,


Six Months Ended December 31,



2023

2022

Change

% Change


2023

2022

Change

% Change

Platforms:











B2B ARR (Annual recurring revenue):











  Beginning of Period

$ 11,020,241

$ 8,331,770

$  2,688,471

32.3 %


$   9,444,130

$   7,922,188

$  1,521,942

19.2 %


   Incremental ARR

594,507

445,207

149,300

33.5 %


2,170,618

854,789

1,315,829

153.9 %


  End of Period

$ 11,614,748

$ 8,776,977

$  2,837,771

32.3 %


$ 11,614,748

$   8,776,977

$  2,837,771

32.3 %












Deployments:











  Beginning of Period

880

756

124

16.4 %


835

733

102

13.9 %


   Incremental Deployments

62

34

28

82.4 %


107

57

50

87.7 %


  End of Period

942

790

152

19.2 %


942

790

152

19.2 %












ASP (Average sales price):











  Beginning of Period

$         12,523

$       11,021

$          1,502

13.6 %


$         11,310

$         10,808

$              502

4.6 %


  End of Period

$         12,330

$       11,110

$          1,220

11.0 %


$         12,330

$         11,110

$          1,220

11.0 %













B2C ARR (Annual recurring revenue):











  Beginning of Period

$                  –

$                –

$                 –



$                  –

$                  –

$                 –



   Incremental ARR

3,954,090

3,954,090

NM


3,954,090

3,954,090

NM


  End of Period

$   3,954,090

$                –

$  3,954,090

NM


$   3,954,090

$                  –

$  3,954,090

NM













Total ARR (Annualized recurring revenue):

$ 15,568,838

$ 8,776,977

$  6,791,861

77.4 %


$ 15,568,838

$   8,776,977

$  6,791,861

77.4 %












Transaction Customers:











Corporate customers

1,065

921

144

15.6 %


1,078

922

157

17.0 %


Academic customers

333

302

31

10.3 %


319

300

19

6.3 %


Total customers

1,398

1,223

175

14.3 %


1,397

1,222

176

14.4 %

Active Customer Accounts, Transactions and Annual Recurring Revenue

The company defines active customer accounts as the sum of the total quantity of customers per month for each month in the period divided by the respective number of months in the period. The quantity of customers per month is defined as customers with at least one transaction during the month.

A transaction is an order for a unit of copyrighted content fulfilled or managed in the Platform.

The company defines annual recurring revenue (“ARR”) as the value of contracted Platform subscription recurring revenue normalized to a one-year period.  For B2C ARR, this includes the annualized value of monthly subscriptions, meaning their monthly value multiplied by twelve.

Use of Non-GAAP Measure – Adjusted EBITDA

Research Solutions’ management evaluates and makes operating decisions using various financial metrics. In addition to the company’s GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP measure provides useful information about the company’s operating results.

The tables below provide a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure. Adjusted EBITDA is defined as net income (loss), plus interest expense, other income (expense), foreign currency transaction loss, provision for income taxes, depreciation and amortization, stock-based compensation, gain on sale of discontinued operations, and other potential adjustments that may arise. Set forth below is a reconciliation of Adjusted EBITDA to net income (loss):



Quarter Ended December 31,


Six Months Ended December 31,



2023

2022

Change

% Change


2023

2022

Change

% Change

Net Income (loss)

$       (53,628)

$   (255,530)

$      201,902

79.0 %


$  (1,041,671)

$       (40,965)

$ (1,000,706)

-2442.8 %

 Add (deduct):










Other income (expense)

(376,426)

(74,695)

(301,731)

404.0 %


(516,737)

(113,764)

(402,973)

354.2 %


Foreign currency translation loss

(13,738)

(84,179)

70,441

83.7 %


(7,118)

(11,663)

4,545

39.0 %


Provision for income taxes

10,057

782

9,275

1186.1 %


39,459

4,915

34,544

702.8 %


Depreciation and amortization

155,749

6,342

149,407

2355.8 %


215,369

12,154

203,215

1672.0 %


Stock-based compensation

596,455

608,703

(12,248)

-2.0 %


1,188,269

784,064

404,205

51.6 %


Gain on sale of disc. ops.




 Adjusted EBITDA

$       318,469

$     201,423

$      117,046

58.1 %


$     (122,429)

$       634,741

$    (757,170)

NM

About Research Solutions 

Research Solutions, Inc. (NASDAQ: RSSS) provides cloud-based technologies to streamline the process of obtaining, managing, and creating intellectual property. Founded in 2006 as Reprints Desk, the company was a pioneer in developing solutions to serve researchers. Today, more than 70 percent of the top pharmaceutical companies, prestigious universities, and emerging businesses rely on Article Galaxy, the company’s SaaS research platform, to streamline access to the latest scientific research and data with 24/7 customer support. For more information and details, please visit www.researchsolutions.com 

Important Cautions Regarding Forward-Looking Statements

Certain statements in this press release may contain “forward-looking statements” regarding future events and our future results. All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the markets in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects”, “intends,” “plans,” “believes,” “seeks,” “estimates,” “endeavors,” “strives,” “may,” or variations of such words, and similar expressions are intended to identify such forward-looking statements. Readers are cautioned that these forward-looking statements are subject to a number of risks, uncertainties and assumptions that are difficult to predict, estimate or verify. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Such risks and uncertainties include those factors described in the Company’s most recent annual report on Form 10-K, as such may be amended or supplemented by subsequent quarterly reports on Form 10-Q, or other reports filed with the Securities and Exchange Commission. Examples of forward-looking statements in this release include statements regarding enhanced product offerings, additional customers, and the Company’s prospects for growth. Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements. For more information, please refer to the Company’s filings with the Securities and Exchange Commission. 

Research Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets




December 31, 







2023


June 30, 




(unaudited)


2023


Assets








Current assets:








Cash and cash equivalents


$

2,697,659


$

13,545,333


Accounts receivable, net of allowance of $94,991 and $85,015, respectively



7,289,248



6,153,063


Prepaid expenses and other current assets



547,786



400,340


Prepaid royalties



1,081,578



1,202,678


Total current assets



11,616,271



21,301,414










Goodwill (provisional)



16,451,937












Other assets:








Property and equipment, net of accumulated depreciation of $905,411 and $881,908, respectively



103,195



70,193


Intangible assets, net of accumulated amortization of $940,234 and $747,355, respectively
($10,806,487 provisional)



11,290,225



462,068


Deposits and other assets



1,060



1,052


Total assets


$

39,462,688


$

21,834,727










Liabilities and Stockholders’ Equity








Current liabilities:








Accounts payable and accrued expenses


$

8,862,829


$

8,079,516


Deferred revenue



7,843,674



6,424,724


Total current liabilities



16,706,503



14,504,240










Long-term liabilities:








Contingent earnout liability



8,792,811




Total liabilities



25,499,314



14,504,240










Commitments and contingencies
















Stockholders’ equity:








Preferred stock; $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding






Common stock; $0.001 par value; 100,000,000 shares authorized; 32,619,598 and
29,487,508 shares issued and outstanding, respectively



32,620



29,487


Additional paid-in capital



37,607,895



29,941,873


Accumulated deficit



(23,564,320)



(22,522,649)


Accumulated other comprehensive loss



(112,821)



(118,224)


Total stockholders’ equity



13,963,374



7,330,487


Total liabilities and stockholders’ equity


$

39,462,688


$

21,834,727


Research Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations and Other Comprehensive Loss
(Unaudited)




Three Months Ended


Six Months Ended




December 31, 


December 31, 




2023


2022


2023


2022
















Revenue:














Platforms


$

3,125,584


$

2,110,272


$

5,725,776


$

4,130,239


Transactions



7,188,158



6,606,394



14,648,937



13,271,070


Total revenue



10,313,742



8,716,666



20,374,713



17,401,309
















Cost of revenue:














Platforms



486,185



253,073



868,799



483,546


Transactions



5,343,755



5,059,766



10,990,546



10,164,688


Total cost of revenue



5,829,940



5,312,839



11,859,345



10,648,234


Gross profit



4,483,802



3,403,827



8,515,368



6,753,075
















Operating expenses:














Selling, general and administrative



4,748,050



3,726,928



9,818,948



6,890,735


Depreciation and amortization



155,749



6,342



215,369



12,154


Total operating expenses



4,903,799



3,733,270



10,034,317



6,902,889
















Loss from operations



(419,997)



(329,443)



(1,518,949)



(149,814)
















Other income



376,426



74,695



516,737



113,764
















Loss from operations before provision for income taxes



(43,571)



(254,748)



(1,002,212)



(36,050)


Provision for income taxes



(10,057)



(782)



(39,459)



(4,915)
















Net loss



(53,628)



(255,530)



(1,041,671)



(40,965)
















Other comprehensive income (loss):














Foreign currency translation



6,349



6,524



5,403



1,348


Comprehensive loss


$

(47,279)


$

(249,006)


$

(1,036,268)


$

(39,617)
















Loss per common share:














Net loss per share, basic and diluted


$


$

(0.01)


$

(0.04)


$


Weighted average common shares outstanding, basic and diluted



28,092,945



26,816,550



27,564,404



26,767,360


Research Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)




Six Months Ended




December 31, 




2023


2022










Cash flow from operating activities:








Net loss


$

(1,041,671)


$

(40,965)


Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:








Depreciation and amortization



215,369



12,154


Fair value of vested stock options



61,714



301,737


Fair value of vested restricted common stock



1,105,606



482,327


Fair value of vested unrestricted common stock





68,272


Modification cost of accelerated vesting of restricted common stock



20,949




Changes in operating assets and liabilities:








Accounts receivable



(681,502)



8,159


Prepaid expenses and other current assets



(67,986)



(67,603)


Prepaid royalties



121,100



805,436


Accounts payable and accrued expenses



81,078



(974,931)


Deferred revenue



(241,545)



428,999


Net cash provided by (used in) operating activities



(426,888)



1,023,585










Cash flow from investing activities:








Purchase of property and equipment



(55,763)



(18,876)


Payment for acquisition of Resolute, net of cash acquired



(2,718,253)




Payment for acquisition of Scite, net of cash acquired



(7,305,493)




Payment for non-refundable deposit for asset acquisition





(297,450)


Net cash used in investing activities



(10,079,509)



(316,326)










Cash flow from financing activities:








Common stock repurchase



(68,748)



(48,729)


Payment of contingent acquisition consideration



(278,195)




Net cash used in financing activities



(346,943)



(48,729)










Effect of exchange rate changes



5,666



859


Net increase (decrease) in cash and cash equivalents



(10,847,674)



659,389


Cash and cash equivalents, beginning of period



13,545,333



10,603,175


Cash and cash equivalents, end of period


$

2,697,659


$

11,262,564










Supplemental disclosures of cash flow information:








Cash paid for income taxes


$

39,459


$

4,915










Non-cash investing and financing activities:








Contingent consideration accrual on asset acquisition


$

36,364


$


SOURCE Research Solutions, Inc.

Originally published at https://www.prnewswire.com/news-releases/research-solutions-reports-fiscal-second-quarter-2024-results-302057973.html
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