Research Solutions Reports Fiscal Fourth Quarter and Full Year 2021 Results

Rhea-AI Summary

Research Solutions, Inc. (NASDAQ: RSSS) reported financial results for Q4 and fiscal year 2021, highlighting a 4.2% increase in total revenue to $8.2 million for Q4 and a 2.2% increase to $31.8 million for the full year. Platform revenue surged 34% to $1.4 million, aided by a 32% rise in annual recurring revenue, totaling $5.9 million. Despite a net loss of ($89,000) for Q4, adjusted EBITDA improved to $134,000. The company reported $11.0 million in cash, up $1.7 million year-over-year, indicating a strong financial position.

Positive

• Total revenue increased by 4.2% to $8.2 million in Q4 2021.
• Platform revenue grew by 34% to $1.4 million in Q4 2021.
• Annual recurring revenue rose by 32% to $5.9 million.
• Total gross margin improved by 160 basis points to 33.4% in Q4 2021.
• Adjusted EBITDA increased to $134,000 for Q4.

Negative

• Net loss of ($89,000) in Q4 2021 compared to a net loss of ($1,000) in Q4 2020.
• Transaction revenue was relatively unchanged at $6.8 million in Q4 2021.
• Total operating expenses rose to $2.8 million, an increase of 12.6%.

HENDERSON, Nev., Sept. 23, 2021 /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, 2021.

Fiscal Fourth Quarter 2021 Highlights

• Total revenue increased 4.2% to $8.2 million
• Platform revenue up 34% to $1.4 million, Annual recurring revenue up 32% to $5.9 million.
• Total gross margin improved 160 basis points to 33.4%.
• Earnings of nil per share, unchanged from the prior-year quarter
• Adjusted EBITDA of $134,000, compared to $146,000

Full-Year Fiscal 2021 Highlights

• Total revenue increased 2.2% to $31.8 million
• Platform revenue of $5.1 million, a 32% increase, with a 38% increase in total Platform deployments to 553
• Total gross margin increased 140 basis points to 32.4%
• Loss of ($0.01) per share, compared to ($0.03) per share Adjusted EBITDA of $700,000, an improvement of $557,000
• Cash and cash equivalents increased to $11.0 million, up $1.7 million compared to prior year end

"Our fourth quarter and fiscal 2021 results reflect the continued momentum across our organization.  The third and fourth quarter represented the two best quarters for net platform deployments in company history, contributing to 152 net new deployments for the year," said Roy W. Olivier, Interim President and CEO of Research Solutions. "Through new partnerships and product initiatives - including the recent launch of our Article Galaxy 3.0 platform – our users are capable of accessing information in a faster, more simplified manner. These items, combined with our ongoing sales and marketing improvements and strong balance sheet, leave us well-positioned for continued progress in fiscal 2022."

Fiscal Fourth Quarter 2021 Results

Total revenue increased 4.2% to $8.2 million, compared to $7.9 million in the same year-ago quarter.

Platform subscription revenue increased 34% to $1.4 million compared to approximately $1.1 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 41 net new added in the quarter, and upselling current platform customers. The quarter ended with annual recurring revenue of $5.9 million, up 6% sequentially and 32% year-over-year (see the company's definition of annual recurring revenue below).

Transaction revenue was $6.8 million, relatively unchanged from the fourth quarter of fiscal 2020. Transaction customers count for the quarter was 1,132, compared to 1,087 customers in the prior year quarter (see the company's definition of active customer accounts and transactions below).

Total gross margin improved 160 basis points from the prior-year quarter to 33.4%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $2.8 million, compared to $2.5 million in the fourth quarter of 2020. The increase was primarily due to higher technology and product development,  and administrative personnel costs.

Net loss in the fourth quarter was ($89,000), or nil per share, compared to a net loss of ($1,000), or nil per share, in the prior-year quarter. Adjusted EBITDA was $134,000, compared to $146,000 in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

Full-Year Fiscal 2021 Results

Total revenue increased 2.2% to $31.8 million, compared to $31.1 million in fiscal 2020.

Platform subscription revenue was $5.1 million, a 32% 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 $26.6 million, a 2% decrease compared to the previous year. The decrease is primarily due to a decrease in order volume.

Total gross margin improved 140 basis points over the prior year to 32.4%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $10.6 million compared to $10.5 million in the prior year. The increase was primarily due to higher technology and product development personnel costs.

Net loss from continuing operations improved by $495,000 over the prior year to ($285,000). Net loss per share improved by $0.02 from fiscal 2020, to $(0.01) per share. Adjusted EBITDA was $700,000, compared to $143,000 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, 2021, amounted to $11.0 million compared to $9.3 million as of June 30, 2020. 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 Interim President and CEO Roy W. Olivier and CFO Alan Urban will host the conference call, followed by a question and answer period.

Date: Thursday, September 23, 2021
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: 10016429

The conference call will be broadcast live and available for replay until October 14, 2021, by dialing 1-844-512-2921 and using the replay ID 10016429, 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,
		2021	2020	Change	% Change
Revenue:
	Platforms	$ 1,429,159	$ 1,066,630	$     362,529	34.0%
	Transactions	6,788,494	6,819,150	(30,656)	-0.4%
Total Revenue		8,217,653	7,885,780	331,873	4.2%
Gross Profit:
	Platforms	1,171,840	913,389	258,450	28.3%
	Transactions	1,570,376	1,595,144	(24,768)	-1.6%
Total Gross Profit		2,742,216	2,508,533	233,682	9.3%
Gross profit as a % of revenue:
	Platforms	82.0%	85.6%	-3.6%
	Transactions	23.1%	23.4%	-0.3%
Total Gross Profit		33.4%	31.8%	1.6%
Operating Expenses:
	Sales and marketing	521,220	692,096	(170,876)	-24.7%
	Technology and product development	732,371	537,830	194,541	36.2%
	General and administrative	1,354,244	1,132,483	221,761	19.6%
	Depreciation and amortization	2,694	3,746	(1,052)	-28.1%
	Stock-based compensation	221,589	143,054	78,535	54.9%
	Foreign currency translation loss	(890)	4,214	(5,104)	-121.1%
Total Operating Expenses		2,831,228	2,513,423	317,805	12.6%
Income (loss) from operations		(89,012)	(4,890)	(84,122)	-1720.4%
Other Income (Expenses):
	Other income (expense)	263	4,306	(4,043)	-93.9%
	Provision for income taxes	(127)	25	(152)	608.0%
	Gain on sale of disc'd operations	-	-	-
Total Other Income (Expenses):		136	4,331	(4,195)	-96.9%
Net income (loss)		$     (88,876)	$           (559)	(88,317)	-15,810.2%
Adjusted EBITDA		$     134,381	$     146,124	$     (11,743)	8.0%
		Quarter Ended June 30,
		2021	2020	Change	% Change
Platforms:
	ARR (Annual recurring revenue):
	Beginning of Period	$ 5,554,595	$ 4,149,830	$ 1,404,765	33.9%
	Incremental ARR	325,584	296,258	29,326	9.9%
	End of Period	$ 5,880,179	$ 4,446,088	$ 1,434,091	32.3%
	Deployments:
	Beginning of Period	512	374	138	36.9%
	Incremental Deployments	41	27	14	51.9%
	End of Period	553	401	152	37.9%
	ASP (Average sales price):
	Beginning of Period	$       10,849	$       11,096	$           (247)	-2.2%
	End of Period	$       10,633	$       11,088	$           (454)	-4.1%
Transaction Customers:
	Corporate customers	845	808	37	4.6%
	Academic customers	287	279	8	2.9%
	Total customers	1,132	1,087	45	4.1%

 

Fiscal Full Year Financial and Operational Summary Tables vs. Prior-Year
			Year Ended June 30,
			2021	2020	Change	% Change
Revenue:
	Platforms		$ 5,135,565	$ 3,890,689	$ 1,244,876	32.0%
	Transactions		26,620,780	27,168,048	(547,268)	-2.0%
Total Revenue			31,756,345	31,058,737	697,608	2.2%
Gross Profit:
	Platforms		4,223,595	3,246,551	977,044	30.1%
	Transactions		6,062,419	6,391,331	(328,912)	-5.1%
Total Gross Profit			10,286,014	9,637,882	648,132	6.7%
Gross profit as a % of revenue:
	Platforms		82.2%	83.4%	-1.2%
	Transactions		22.8%	23.5%	-0.8%
Total Gross Profit			32.4%	31.0%	1.4%
Operating Expenses:
	Sales and marketing		2,073,878	2,508,238	(434,360)	-17.3%
	Technology and product development		2,644,274	2,121,978	522,296	24.6%
	General and administrative		4,867,659	4,864,783	2,876	0.1%
	Depreciation and amortization		11,522	23,654	(12,132)	-51.3%
	Stock-based compensation		1,007,673	951,595	56,078	5.9%
	Foreign currency translation loss		(35,960)	19,529	(55,489)	-284.1%
Total Operating Expenses			10,569,046	10,489,777	79,269	0.8%
Income (loss) from operations			(283,032)	(851,895)	568,862	66.8%
Other Income (Expenses):
	Other income (expense)		1,147	80,044	(78,897)	-98.6%
	Provision for income taxes		(3,204)	(7,836)	4,632	59.1%
	Gain on sale of disc'd operations		-	117,445	(117,445)	-100.0%
Total Other Income (Expenses):			(2,057)	189,653	(191,710)	-101.1%
Net income (loss)			$  (285,089)	$  (662,242)	377,152	57.0%
Adjusted EBITDA			$    700,203	$    142,883	$    557,319	-390.1%
			Year Ended June 30,
			2021	2020	Change	% Change
Platforms:
	ARR (Annual recurring revenue):
	Beginning of Period		$ 4,446,088	$ 3,224,672	$ 1,221,416	37.9%
	Incremental ARR		1,434,091	1,221,416	212,675	17.4%
	End of Period		$ 5,880,179	$ 4,446,088	$ 1,434,091	32.3%
	Deployments:
	Beginning of Period		401	301	100	33.2%
	Incremental Deployments		152	100	52	52.0%
	End of Period		553	401	152	37.9%
	ASP (Average sales price):
	Beginning of Period		$       11,088	$       10,713	$             374	3.5%
	End of Period		$       10,633	$       11,088	$           (454)	-4.1%
Transaction Customers:
	Corporate customers		825	841	(16)	-1.8%
	Academic customers		285	278	7	2.3%
	Total customers		1,110	1,119	(9)	-0.8%

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,
		2021	2020	Change	% Change
Net Income (loss)		$     (88,876)	$           (559)	$     (88,317)	15810.2%
Add (deduct):
	Other income (expense)	(263)	(4,306)	4,043	93.9%
	Foreign currency translation loss	(890)	4,214	(5,104)	-121.1%
	Provision for income taxes	127	(25)	152	-608.0%
	Depreciation and amortization	2,694	3,746	(1,052)	-28.1%
	Stock-based compensation	221,589	143,054	78,535	54.9%
	Gain on sale of disc. ops.	-	-	-
Adjusted EBITDA		$     134,381	$     146,124	$     (11,743)	-8.0%

 

		Year Ended June 30,
		2021	2020	Change	% Change
Net Income (loss)		$  (285,089)	$  (662,242)	$    377,152	57.0%
Add (deduct):				-
	Other income (expense)	(1,147)	(80,044)	78,897	98.6%
	Foreign currency translation loss	(35,960)	19,529	(55,489)	-284.1%
	Provision for income taxes	3,204	7,836	(4,632)	-59.1%
	Depreciation and amortization	11,522	23,654	(12,132)	-51.3%
	Stock-based compensation	1,007,673	951,595	56,078	5.9%
	Gain on sale of disc. ops.	-	(117,445)	117,445	100.0%
Adjusted EBITDA		$    700,203	$    142,883	$    557,319	-390.1%

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 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,
		2021			2020
Assets
Current assets:
Cash and cash equivalents		$	11,004,337		$	9,311,556
Accounts receivable, net of allowance of $51,495 and $88,485, respectively			4,717,453			4,449,260
Prepaid expenses and other current assets			270,252			241,747
Prepaid royalties			904,921			720,367
Total current assets			16,896,963			14,722,930
Other assets:
Property and equipment, net of accumulated depreciation of $824,123 and $804,999, respectively			20,755			11,276
Deposits and other assets			906			6,155
Right of use asset, net of accumulated amortization of $463,022 and $390,691, respectively			—			72,331
Total assets		$	16,918,624		$	14,812,692
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses		$	6,687,188		$	6,349,845
Deferred revenue			4,804,351			3,524,507
Lease liability, current portion			—			79,326
Total current liabilities			11,491,539			9,953,678
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; 26,498,215 and 26,032,263 shares issued and outstanding, respectively			26,498			26,032
Additional paid-in capital			26,982,052			26,134,819
Accumulated deficit			(21,461,888)			(21,176,799)
Accumulated other comprehensive loss			(119,577)			(125,038)
Total stockholders' equity			5,427,085			4,859,014
Total liabilities and stockholders' equity		$	16,918,624		$	14,812,692

 

Research Solutions, Inc. and Subsidiaries Consolidated Statements of Operations and Other Comprehensive Loss
		Years Ended
		June 30,
		2021			2020
Revenue:
Platforms		$	5,135,565		$	3,890,689
Transactions			26,620,780			27,168,048
Total revenue			31,756,345			31,058,737
Cost of revenue:
Platforms			911,970			644,138
Transactions			20,558,361			20,776,717
Total cost of revenue			21,470,331			21,420,855
Gross profit			10,286,014			9,637,882
Operating expenses:
Selling, general and administrative			10,557,524			10,466,123
Depreciation and amortization			11,522			23,654
Total operating expenses			10,569,046			10,489,777
Loss from operations			(283,032)			(851,895)
Other income			1,147			80,044
Loss from operations before provision for income taxes			(281,885)			(771,851)
Provision for income taxes			(3,204)			(7,836)
Loss from continuing operations			(285,089)			(779,687)
Gain from sale of discontinued operations			—			117,445
Net loss			(285,089)			(662,242)
Other comprehensive income (loss):
Foreign currency translation			5,461			(15,453)
Comprehensive loss		$	(279,628)		$	(677,695)
Loss per common share:
Loss per share from continuing operations, basic and diluted		$	(0.01)		$	(0.03)
Income per share from discontinued operations, basic and diluted		$	—		$	—
Net loss per share, basic and diluted		$	(0.01)		$	(0.03)
Weighted average common shares outstanding, basic and diluted			26,008,368			24,760,790

 

Research Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows
		Years Ended
		June 30,
		2021			2020
Cash flow from operating activities:
Net loss		$	(285,089)		$	(662,242)
Gain from sale of discontinued operations			—			(117,445)
Loss from continuing operations			(285,089)			(779,687)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			11,522			23,654
Amortization of lease right			72,331			119,914
Fair value of vested stock options			631,335			610,634
Fair value of vested restricted common stock			376,338			340,961
Changes in operating assets and liabilities:
Accounts receivable			(268,193)			43,909
Prepaid expenses and other current assets			(28,505)			199,289
Prepaid royalties			(184,554)			(720,367)
Deposits and other assets			5,360			8,094
Accounts payable and accrued expenses			337,343			1,486,950
Deferred revenue			1,279,844			1,214,301
Lease liability			(79,326)			(129,187)
Net cash provided by operating activities			1,868,406			2,418,465
Cash flow from investing activities:
Purchase of property and equipment			(19,854)			—
Net cash used in investing activities			(19,854)			—
Cash flow from financing activities:
Proceeds from the exercise of stock options			88,850			—
Proceeds from the exercise of warrants			237,501			1,875,000
Common stock repurchase and retirement			(178,012)			(321,601)
Repurchase of stock options and warrants			(308,313)			—
Net cash provided by (used in) financing activities			(159,974)			1,553,399
Effect of exchange rate changes			4,203			(13,398)
Net increase in cash and cash equivalents			1,692,781			3,958,466
Cash and cash equivalents, beginning of period			9,311,556			5,353,090
Cash and cash equivalents, end of period		$	11,004,337		$	9,311,556
Supplemental disclosures of cash flow information:
Cash paid for income taxes		$	3,204		$	7,836

 

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SOURCE Research Solutions, Inc.

FAQ

What were Research Solutions' revenue figures for Q4 2021?

Research Solutions reported total revenue of $8.2 million for Q4 2021, a 4.2% increase from the prior year.

How did platform revenue perform in fiscal year 2021 for RSSS?

Platform revenue for fiscal year 2021 reached $5.1 million, reflecting a 32% increase from the previous year.

What is the adjusted EBITDA for Research Solutions in Q4 2021?

The adjusted EBITDA for Research Solutions in Q4 2021 was $134,000.

What was the net loss for Research Solutions in Q4 2021?

Research Solutions reported a net loss of $89,000 in Q4 2021.

What financial position does Research Solutions have as of June 30, 2021?

As of June 30, 2021, Research Solutions had cash and cash equivalents of $11.0 million.