Research Solutions Reports Fiscal Fourth Quarter and Full Year 2020 Results

Rhea-AI Summary

Research Solutions, Inc. (NASDAQ: RSSS) reported a 5.5% increase in fourth-quarter revenue to $7.9 million and a 7.9% rise in full-year revenue to $31.1 million for FY2020. Platform revenue surged 33% to $1.1 million in Q4 and 38% to $3.9 million for the year, with annual recurring revenue reaching $4.4 million. Gross margins improved to 31.8% in Q4 and 31.0% for the year. Adjusted EBITDA showed significant growth, increasing to $146,000 quarterly and $143,000 annually. Cash reserves rose to $9.3 million. The company successfully uplisted to NASDAQ on March 23, 2020.

Positive

• Total revenue up 5.5% in Q4 to $7.9 million.
• Annual revenue increased 7.9% to $31.1 million.
• Platform revenue increased 33% in Q4 and 38% for the year.
• Annual recurring revenue reached $4.4 million, up 38% YoY.
• Improved gross margin of 31.8% in Q4 and 31.0% for the year.
• Adjusted EBITDA rose to $146,000 quarterly and $143,000 annually.
• Cash and cash equivalents increased to $9.3 million.

Negative

• Net loss of $1,000 in Q4, unchanged from prior year.
• Loss from continuing operations at ($780,000) for the year.
• Operating expenses rose to $10.5 million, up 9.3% YoY.

HENDERSON, Nev., Sept. 24, 2020 /PRNewswire/ -- Research Solutions, Inc. (NASDAQ: RSSS), a pioneer in providing cloud-based workflow solutions for R&D driven organizations, reported financial results for its fiscal fourth quarter and full year 2020 ended June 30, 2020.

Fiscal Fourth Quarter 2020 Highlights

• Total revenue increased 5.5% to $7.9 million
• Platform revenue up 33% to $1.1 million, Annual recurring revenue up 38% to $4.4 million.
• Transaction revenue increased 2% to $6.8 million
• Total gross margin improved 200 basis points to 31.8%.
• Earnings of nil per share, unchanged from the prior-year quarter
• Adjusted EBITDA of $146,000, an improvement of $187,000

Full-Year Fiscal 2020 Highlights

• Total revenue increased 7.9% to $31.1 million
• Platform revenue of $3.9 million, a 38% increase, with a 33% increase in total Platform deployments to 401
• Transaction revenue increased 4.6% to $27.2 million, with customer count up to 1,119 compared to 1,081.
• Total gross margin increased 200 basis points to 31.0%
• Loss from continuing operations improved $395,000 to ($780,000), or ($0.03) per share, compared to ($0.05) per share in the prior year
• Adjusted EBITDA of $143,000, an improvement of $507,000
• Cash and cash equivalents increased to $9.3 million, up $4.0 million compared to prior year end
• Successfully uplisted to Nasdaq Capital Market

"Our fourth quarter and fiscal 2020 results reflect the continued momentum across our organization, including the uplisting of our stock to the NASDAQ market on March 23^rd. We set another record for annual recurring revenue for our Platforms business thanks to another strong quarter of new deployments. The shift in our marketing approach towards enterprise campaigns contributed to the 100 net new Platform deployments for the full year, including 27 in the fourth quarter." said Peter Derycz, President and CEO of Research Solutions. "Our new partnerships and product initiatives expanded our available product offerings, while simplifying access for our customers, some of whom are involved in researching a potential COVID-19 vaccine. With additional product improvements, partnership opportunities on tap and better lead generation, combined with our strong balance sheet, we are well-positioned for continued progress in fiscal 2021."

Fiscal Fourth Quarter 2020 Results

Total revenue increased 5.5% to $7.9 million, compared to $7.5 million in the same year-ago quarter.

Platform subscription revenue increased 33% to approximately $1.1 million compared to $804,000 in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 27 added in the quarter. The quarter ended with annual recurring revenue of $4.4 million, up 7% sequentially and 38% year-over-year (see the company's definition of annual recurring revenue below).

Transaction revenue increased 2% to $6.8 million compared to $6.7 million in the fourth quarter of fiscal 2019. Transaction count increased 7.6% from the year-ago quarter to 231,000, with 1,087 transaction customers essentially unchanged from the fourth quarter of fiscal 2019 (see the company's definition of active customer accounts and transactions below).

Total gross margin improved 200 basis points from the prior-year quarter to 31.8%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $2.5 million, compared to $2.4 million in the fourth quarter of 2019. The increase was primarily due to greater personnel costs.

Net loss in the fourth quarter was ($1,000), or nil per share, compared to a net loss of ($72,000), or nil per share, in the prior-year quarter. Adjusted EBITDA was $146,000, a $187,000 improvement from the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

Full-Year Fiscal 2020 Results

Total revenue increased 7.9% to $31.1 million, compared to $28.8 million in fiscal 2019.

Platform subscription revenue was $3.9 million, a 38% increase over the prior year. The increase was primarily due an increase in the total number of paid Platform deployments and upselling current platform customers.

Transaction revenue was $27.2 million, a 4.6% increase compared to the previous year. The increase is primarily due to orders from new customers.

Total gross margin improved 210 basis points over the prior year to 31.0%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $10.5 million compared to $9.6 million in the prior year. The increase was primarily due to greater personnel costs, higher advertising spend, professional service fees, and costs associated with the NASDAQ uplisting in March.

Net loss from continuing operations improved by $395,000 over the prior year to ($780,000). Net loss per share improved by $0.02 from fiscal 2019, to $(0.03) per share. Adjusted EBITDA was $143,000, compared to $(365,000) in the prior year (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

Cash and cash equivalents on June 30, 2020, amounted to $9.3 million compared to $5.4 million as of June 30, 2019. There were no outstanding borrowings under the company's $2.5 million revolving line of credit and the company had no long-term liabilities or other debt.

Conference Call
Research Solutions President and CEO Peter Derycz and CFO Alan Urban will host the conference call, followed by a question and answer period.

Date: Thursday, September 24, 2020
Time: 5:00 p.m. ET (2:00 p.m. PT)
Toll-free dial-in number: 1-855-327-6837
International dial-in number: 1-631-891-4304
Conference ID: 10011047

The conference call will be broadcast live and available for replay until October 15, 2020, by dialing 1-844-512-2921 and using the replay ID 10011047, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.

 

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

		Quarter Ended June 30,
		2020	2019	Change	% Change
Revenue:
	Platforms	$    1,066,630	$        803,917	$        262,713	32.7%
	Transactions	6,819,150	6,670,685	148,465	2.2%
Total Revenue		7,885,780	7,474,602	411,178	5.5%
Gross Profit:
	Platforms	913,389	661,549	251,841	38.1%
	Transactions	1,595,144	1,566,056	29,088	1.9%
Total Gross Profit		2,508,533	2,227,605	280,929	12.6%
Gross profit as a % of revenue:
	Platforms	85.6%	82.3%	3.3%
	Transactions	23.4%	23.5%	-0.1%
Total Gross Profit		31.8%	29.8%	2.0%
Operating Expenses:
	Sales and marketing	692,096	659,108	32,988	5.0%
	Technology and product development	537,830	549,198	(11,368)	-2.1%
	General and administrative	1,132,483	1,060,268	72,215	6.8%
	Depreciation and amortization	3,746	8,351	(4,605)	-55.1%
	Stock-based compensation	143,054	126,903	16,151	12.7%
	Foreign currency translation loss	4,214	7,193	(2,979)	-41.4%
Total Operating Expenses		2,513,423	2,411,021	102,402	4.2%
Income (loss) from operations		(4,890)	(183,416)	178,527	97.3%
Other Income (Expenses):
	Interest expense	-	-	-
	Other income (expense)	4,306	32,184	(27,878)	-86.6%
	Provision for income taxes	25	(4,895)	4,920	100.5%
	Gain on sale of disc'd operations	-	84,275	(84,275)	-100.0%
Total Other Income (Expenses):		4,331	111,564	(107,233)	-96.1%
Net income (loss)		$              (559)	$         (71,852)	71,294	99.2%
Adjusted EBITDA		$        146,124	$         (40,969)	$        187,094	456.7%
		Quarter Ended June 30,
		2020	2019	Change	% Change
Platforms:
	ARR (Annual recurring revenue):
	Beginning of Period	$    4,149,830	$    2,987,647	$    1,162,183	38.9%
	Incremental ARR	296,258	237,025	59,233	25.0%
	End of Period	$    4,446,088	$    3,224,672	$    1,221,416	37.9%
	Deployments:
	Beginning of Period	374	281	93	33.1%
	Incremental Deployments	27	20	7	35.0%
	End of Period	401	301	100	33.2%
	ASP (Average sales price):
	Beginning of Period	$          11,096	$          10,632	$                464	4.4%
	End of Period	$          11,088	$          10,713	$                374	3.5%
Transactions:
	Transaction count	230,916	214,686	16,230	7.6%
	Corporate customers	808	832	(24)	-2.9%
	Academic customers	279	258	21	8.1%
	Total customers	1,087	1,090	(3)	-0.3%

 

Fiscal Full Year Financial and Operational Summary Tables vs. Prior-Year

			Year Ended June 30,
			2020	2019	Change	% Change
	Revenue:
		Platforms	$    3,890,689	$    2,809,201	$    1,081,488	38.5%
		Transactions	27,168,048	25,984,721	1,183,327	4.6%
	Total Revenue		31,058,737	28,793,922	2,264,815	7.9%
	Gross Profit:
		Platforms	3,246,551	2,301,826	944,725	41.0%
		Transactions	6,391,331	6,041,635	349,696	5.8%
	Total Gross Profit		9,637,882	8,343,461	1,294,421	15.5%
	Gross profit as a % of revenue:
		Platforms	83.4%	81.9%	1.5%
		Transactions	23.5%	23.3%	0.3%
	Total Gross Profit		31.0%	29.0%	2.1%
	Operating Expenses:
		Sales and marketing	2,508,238	2,079,045	429,193	20.6%
		Technology and product development	2,121,978	2,139,950	(17,972)	-0.8%
		General and administrative	4,864,783	4,488,940	375,843	8.4%
		Depreciation and amortization	23,654	38,816	(15,162)	-39.1%
		Stock-based compensation	951,595	827,172	124,423	15.0%
		Foreign currency translation loss	19,529	24,500	(4,971)	-20.3%
	Total Operating Expenses		10,489,777	9,598,423	891,354	9.3%
	Income (loss) from operations		(851,895)	(1,254,962)	403,068	32.1%
	Other Income (Expenses):
		Interest expense	-	-	-
		Other income (expense)	80,044	107,308	(27,264)	-25.4%
		Provision for income taxes	(7,836)	(27,040)	19,204	71.0%
		Gain on sale of disc'd operations	117,445	214,737	(97,292)	-45.3%
	Total Other Income (Expenses):		189,653	295,005	(105,352)	-35.7%
	Net income (loss)		$      (662,242)	$      (959,957)	297,716	31.0%
	Adjusted EBITDA		$        142,883	$      (364,474)	$        507,358	139.2%
			Year Ended June 30,
			2020	2019	Change	% Change
	Platforms:
		ARR (Annual recurring revenue):
		Beginning of Period	$    3,224,672	$    2,252,956	$        971,716	43.1%
		Incremental ARR	1,221,416	971,716	249,700	25.7%
		End of Period	$    4,446,088	$    3,224,672	$     1,221,416	37.9%
		Deployments:
		Beginning of Period	301	227	74	32.6%
		Incremental Deployments	100	74	26	35.1%
		End of Period	401	301	100	33.2%
		ASP (Average sales price):
		Beginning of Period	$          10,713	$             9,925	$                788	7.9%
		End of Period	$          11,088	$           10,713	$                374	3.5%
	Transactions:
		Transaction count	887,561	831,099	56,462	6.8%
		Corporate customers	841	835	6	0.7%
		Academic customers	278	246	32	13.0%
		Total customers	1,119	1,081	38	3.5%

 

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 as the value of contracted Platform subscription recurring revenue normalized to a one-year period.

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 June 30,					Year Ended June 30,
			2020	2019	Change	% Change		2020	2019	Change	% Change
	Net Income (loss)		$        (559)	$  (71,852)	$    71,294	99.2%		$(662,242)	$(959,957)	$  297,716	31.0%
	Add (deduct):
		Other income (expense)	(4,306)	(32,184)	27,878	86.6%		(80,044)	(107,308)	27,264	25.4%
		Foreign currency translation loss	4,214	7,193	(2,979)	-41.4%		19,529	24,500	(4,971)	-20.3%
		Provision for income taxes	(25)	4,895	(4,920)	-100.5%		7,836	27,040	(19,204)	-71.0%
		Depreciation and amortization	3,746	8,351	(4,605)	-55.1%		23,654	38,816	(15,162)	-39.1%
		Stock-based compensation	143,054	126,903	16,151	12.7%		951,595	827,172	124,423	15.0%
		Gain on sale of disc. ops.	-	(84,275)	84,275	100.0%		(117,445)	(214,737)	97,292	45.3%
	Adjusted EBITDA		$  146,124	$  (40,969)	$  187,094	456.7%		$  142,883	$(364,474)	$  507,358	139.2%

 

About Research Solutions and Reprints Desk
Research Solutions, Inc. (NASDAQ: RSSS) is a pioneer in providing seamless access and simplifies how organizations and individual researchers discover, acquire, and manage scholarly journal articles, book chapters and other content in scientific, technical, and medical (STM) research. More than 70 percent of the top pharmaceutical companies, prestigious universities, and emerging businesses rely on Article Galaxy, a cloud-based SaaS research platform, for simplified and lowest cost access to the latest scientific research and data. Featuring an ecosystem of app-like Gadgets for a personalized research experience, Article Galaxy offers individual as well as enterprise plans, coupled with unparalleled, 24/7 customer support. For more information and details, please visit www.researchsolutions.com and www.reprintsdesk.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 improved liquidity, an expanded investor base and driving long-term shareholder value as a result of listing on Nasdaq, continued momentum in the Company's business and financial performance, and the Company's strong outlook. 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
		June 30,			June 30,
		2020			2019
Assets
Current assets:
Cash and cash equivalents		$	9,311,556		$	5,353,090
Accounts receivable, net of allowance of $88,485 and $100,175, respectively			4,449,260			4,493,169
Prepaid expenses and other current assets			241,747			323,591
Prepaid royalties			720,367			-
Total current assets			14,722,930			10,169,850
Other assets:
Property and equipment, net of accumulated depreciation of $804,999 and $789,788, respectively			11,276			36,828
Deposits and other assets			6,155			14,406
Right of use asset, net of accumulated amortization of $390,691 and $270,777, respectively			72,331			192,245
Total assets		$	14,812,692		$	10,413,329
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses		$	6,349,845		$	4,862,895
Deferred revenue			3,524,507			2,310,206
Lease liability, current portion			79,326			129,187
Total current liabilities			9,953,678			7,302,288
Long-term liabilities:
Lease liability, long-term portion			-			79,326
Total liabilities			9,953,678			7,381,614
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; 26,032,263 and 24,375,948  shares issued and outstanding, respectively			26,032			24,376
Additional paid-in capital			26,134,819			23,631,481
Accumulated deficit			(21,176,799)			(20,514,557)
Accumulated other comprehensive loss			(125,038)			(109,585)
Total stockholders' equity			4,859,014			3,031,715
Total liabilities and stockholders' equity		$	14,812,692		$	10,413,329

 

 

Research Solutions, Inc. and Subsidiaries Consolidated Statements of Operations and Other Comprehensive Loss
		Years Ended
		June 30,
		2020			2019
Revenue:
Platforms		$	3,890,689		$	2,809,201
Transactions			27,168,048			25,984,721
Total revenue			31,058,737			28,793,922
Cost of revenue:
Platforms			644,138			507,375
Transactions			20,776,717			19,943,086
Total cost of revenue			21,420,855			20,450,461
Gross profit			9,637,882			8,343,461
Operating expenses:
Selling, general and administrative			10,466,123			9,559,608
Depreciation and amortization			23,654			38,816
Total operating expenses			10,489,777			9,598,424
Loss from operations			(851,895)			(1,254,963)
Other income			80,044			107,308
Loss from operations before provision for income taxes			(771,851)			(1,147,655)
Provision for income taxes			(7,836)			(27,040)
Loss from continuing operations			(779,687)			(1,174,695)
Gain from sale of discontinued operations			117,445			214,737
Net loss			(662,242)			(959,958)
Other comprehensive loss: Foreign currency translation			(15,453)			(14,878)
Comprehensive loss		$	(677,695)		$	(974,836)
Loss per common share:
Loss per share from continuing operations, basic and diluted		$	(0.03)		$	(0.05)
Income per share from discontinued operations, basic and diluted		$	-		$	0.01
Net loss per share, basic and diluted		$	(0.03)		$	(0.04)
Weighted average common shares outstanding, basic and diluted			24,760,790			23,815,761

 

 

Research Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows
				Years Ended
				June 30,
				2020								2019
Cash flow from operating activities:
Net loss				$		(662,242)						$		(959,958)
Gain from sale of discontinued operations						(117,445)								(214,737)
Loss from continuing operations						(779,687)								(1,174,695)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization						23,654								38,816
Amortization of lease right						119,914								115,079
Fair value of vested stock options						610,634								523,978
Fair value of vested restricted common stock						340,961								303,194
Changes in operating assets and liabilities:
Accounts receivable						43,909								(241,918)
Prepaid expenses and other current assets						199,289								218,033
Prepaid royalties						(720,367)								93,336
Deposits and other assets						8,094								-
Accounts payable and accrued expenses						1,486,950								175,949
Deferred revenue						1,214,301								644,460
Lease liability						(129,187)								(119,786)
Net cash provided by operating activities						2,418,465								576,446
Cash flow from investing activities:
Purchase of property and equipment						-								(15,828)
Net cash used in investing activities						-								(15,828)
Cash flow from financing activities:
Common stock repurchase and retirement						(321,601)								(200,023)
Proceeds from the exercise of stock options						1,875,000								100,000
Net cash provided by (used in) financing activities						1,553,399								(100,023)
Effect of exchange rate changes						(13,398)								(15,685)
Net increase in cash and cash equivalents						3,958,466								444,910
Cash and cash equivalents, beginning of period						5,353,090								4,908,180
Cash and cash equivalents, end of period				$		9,311,556						$		5,353,090
Supplemental disclosures of cash flow information:
Cash paid for income taxes				$		7,836						$		27,040

 

 

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SOURCE Research Solutions, Inc.

FAQ

What were Research Solutions' Q4 2020 financial results?

In Q4 2020, Research Solutions reported total revenue of $7.9 million, a 5.5% increase year-over-year.

How did Research Solutions perform for the full year 2020?

For the full year 2020, Research Solutions achieved total revenue of $31.1 million, a rise of 7.9% compared to the previous year.

What is the annual recurring revenue for Research Solutions?

The annual recurring revenue for Research Solutions reached $4.4 million, representing a 38% increase over the prior year.

What was the adjusted EBITDA for Research Solutions in FY2020?

Research Solutions reported adjusted EBITDA of $143,000 for the fiscal year 2020.

What significant event occurred for Research Solutions in 2020?

Research Solutions successfully uplisted to the NASDAQ Capital Market on March 23, 2020.