Research Solutions Reports Fiscal Third Quarter 2024 Results
Research Solutions, Inc. (NASDAQ: RSSS) reported a 17% revenue increase in the fiscal third quarter of 2024, reaching a total revenue of $12.1 million. The company achieved an 82% rise in Annual Recurring Revenue (ARR) to $16.6 million, with positive net income of $76,000 and record Adjusted EBITDA of $961,000. The quarter marked strong growth in both B2B and B2C ARR, along with the launch of two new product offerings. Research Solutions sees its expanded market delivering long-term value for shareholders.
17% revenue increase in the fiscal third quarter of 2024.
82% rise in Annual Recurring Revenue (ARR) to $16.6 million.
Positive net income of $76,000.
Record Adjusted EBITDA of $961,000.
Strong growth in both B2B and B2C ARR.
Launch of two new product offerings: Technology Landscape and Clinical Trial Landscape.
Opportunity for meaningful growth and long-term value for shareholders.
Quarterly cash flow from operations increased, potentially unsustainable.
Churn in ResoluteAI ARR may affect future revenue streams.
Net income decreased to $76,000 compared to $237,000 in the prior-year quarter.
Significant increase in total operating expenses, impacting profitability.
Decline in net income, diluted earnings per share, and Adjusted EBITDA compared to the previous year.
Insights
Observing the reported 17% increase in total revenue and a significant 76% boost in platform revenue, Research Solutions appears to be on a trajectory of robust growth. The jump in Annual Recurring Revenue (ARR) by 82% to
However, investors should consider the modest net income of
The strategic acquisitions of ResoluteAI and Scite show a tactical expansion into B2B and B2C markets, with the launch of two new product offerings, Technology Landscape and Clinical Trial Landscape, which could address a broader range of customer needs. The increase in gross profit by 36% and the improvement in total gross margin by 630 basis points to 45.2% reflect well on the company's efficiency and product mix strategy.
Though there has been some churn in ResoluteAI ARR, the growth in Scite ARR signals potential for cross-selling opportunities. For investors, the expansion of the addressable market and the company's role as a part of the critical research process are positive indicators, suggesting potential for long-term value creation.
Reports
Positive Net Income and Record Adjusted EBITDA
Fiscal Third Quarter 2024 Summary (compared to prior-year quarter)
- Total revenue of
$12.1 million 17% increase. - Platform revenue up
76% to$4.0 million . Annual Recurring Revenue ("ARR") up82% to$16.6 million , which includes approximately$11.7 million $4.9M - Gross profit up
36% . Total gross margin improved 630 basis points to45.2% . - Net income of
$76,000 $0.00 $237,000 $0.01 - Adjusted EBITDA of
$961,000 $559,000 - Quarterly cash flow from operations of over
$2 million $0.8 million
"Our third quarter performance reflects the first full quarter of contribution from Scite and continued progress integrating Scite and ResoluteAI within our Article Galaxy platform. While we realized some anticipated churn in ResoluteAI ARR in the quarter, we experienced strong growth in both Scite B2B and B2C ARR, closing some large cross-sell opportunities with existing customers," said Roy W. Olivier, President and CEO of Research Solutions. "During the quarter we launched two new product offerings, Technology Landscape and Clinical Trial Landscape, both of which harness our ability to simultaneously search across multiple datasets, extracting and synthesizing insights into use case specific outputs as part of our strategy to deliver workflows that save time for our customers. The highly specialized value proposition for our product offerings continues to grow as we serve as a critical piece of the research process, giving users the opportunity to effectively discover, acquire and manage the most relevant content all in one place. Overall, we believe our offerings and expanded addressable market will deliver meaningful growth and long-term value for our shareholders."
Fiscal Third Quarter 2024 Results
Total revenue was
Platform subscription revenue for the quarter was
Transaction revenue was
Total gross margin improved 630 basis points from the prior-year quarter to
Total operating expenses were
Net income in the third quarter was
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, May 9, 2024
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-785-424-1699
Conference ID: RESEARCH
The conference call will be broadcast live and available for replay until June 9, 2024 by dialing 1-412-317-6671 and using the replay ID 11155728, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.
Fiscal Third Quarter Financial and Operational Summary Tables vs. Prior-Year Quarter | ||||||||||
Quarter Ended March 31, | Nine Months Ended March 31, | |||||||||
2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | |||
Revenue: | ||||||||||
Platforms | $ 3,953,403 | $ 2,249,632 | $ 1,703,771 | 75.7 % | $ 9,679,179 | $ 6,379,871 | $ 3,299,308 | 51.7 % | ||
Transactions | $ 8,162,269 | $ 8,092,794 | 69,475 | 0.9 % | $ 22,811,206 | $ 21,363,864 | 1,447,342 | 6.8 % | ||
Total Revenue | 12,115,672 | 10,342,426 | 1,773,246 | 17.1 % | 32,490,385 | 27,743,735 | 4,746,650 | 17.1 % | ||
Gross Profit: | ||||||||||
Platforms | 3,382,051 | 1,981,002 | 1,401,049 | 70.7 % | 8,239,028 | 5,627,695 | 2,611,333 | 46.4 % | ||
Transactions | 2,099,881 | 2,046,271 | 53,610 | 2.6 % | 5,758,272 | 5,152,653 | 605,619 | 11.8 % | ||
Total Gross Profit | 5,481,932 | 4,027,273 | 1,454,659 | 36.1 % | 13,997,300 | 10,780,348 | 3,216,952 | 29.8 % | ||
Gross profit as a % of revenue: | ||||||||||
Platforms | 85.5 % | 88.1 % | -2.5 % | 85.1 % | 88.2 % | -3.1 % | ||||
Transactions | 25.7 % | 25.3 % | 0.4 % | 25.2 % | 24.1 % | 1.1 % | ||||
Total Gross Profit | 45.2 % | 38.9 % | 6.3 % | 43.1 % | 38.9 % | 4.2 % | ||||
Operating Expenses: | ||||||||||
Sales and marketing | 1,122,365 | 642,624 | 479,741 | 74.7 % | 2,612,308 | 1,830,448 | 781,860 | 42.7 % | ||
Technology and product development | 1,371,754 | 953,677 | 418,077 | 43.8 % | 3,952,891 | 2,751,099 | 1,201,792 | 43.7 % | ||
General and administrative | 2,027,074 | 1,871,591 | 155,483 | 8.3 % | 6,593,791 | 5,004,679 | 1,589,112 | 31.8 % | ||
Depreciation and amortization | 309,898 | 18,332 | 291,566 | 1590.5 % | 525,267 | 30,486 | 494,781 | 1623.0 % | ||
Stock-based compensation | 541,002 | 480,458 | 60,544 | 12.6 % | 1,729,271 | 1,264,522 | 464,749 | 36.8 % | ||
Foreign currency translation loss | 22,177 | (72,547) | 94,724 | NM | 15,059 | (84,210) | 99,269 | NM | ||
Total Operating Expenses | 5,394,270 | 3,894,135 | 1,500,135 | 38.5 % | 15,428,587 | 10,797,024 | 4,631,563 | 42.9 % | ||
Income (loss) from operations | 87,663 | 133,139 | (45,476) | -34.2 % | (1,431,286) | (16,675) | (1,414,611) | 8483.2 % | ||
Other Income (Expenses): | ||||||||||
Other income | 31,228 | 104,331 | (73,103) | -70.1 % | 547,965 | 218,095 | 329,870 | 151.3 % | ||
Provision for income taxes | (42,590) | (628) | (41,962) | NM | (82,049) | (5,543) | (76,506) | NM | ||
Total Other Income (Expenses): | (11,362) | 103,703 | (115,065) | NM | 465,916 | 212,552 | 253,364 | 119.2 % | ||
Net income (loss) | $ 76,301 | $ 236,842 | (160,541) | -67.8 % | $ (965,370) | $ 195,877 | (1,161,247) | NM | ||
NM | ||||||||||
Adjusted EBITDA | $ 960,740 | $ 559,382 | $ 401,358 | 71.8 % | $ 838,311 | $ 1,194,123 | $ (355,812) | -29.8 % | ||
Quarter Ended March 31, | Nine Months Ended March 31, | |||||||||
2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | |||
Platforms: | ||||||||||
B2B ARR (Annual recurring revenue*): | ||||||||||
Beginning of Period | $ 11,614,748 | $ 8,776,977 | $ 2,837,771 | 32.3 % | $ 9,444,130 | $ 7,922,188 | $ 1,521,942 | 19.2 % | ||
Incremental ARR | 38,315 | 330,704 | (292,389) | -88.4 % | 2,208,933 | 1,185,493 | 1,023,440 | 86.3 % | ||
End of Period | $ 11,653,063 | $ 9,107,681 | $ 2,545,382 | 27.9 % | $ 11,653,063 | $ 9,107,681 | $ 2,545,382 | 27.9 % | ||
Deployments: | ||||||||||
Beginning of Period | 942 | 790 | 152 | 19.2 % | 835 | 733 | 102 | 13.9 % | ||
Incremental Deployments | 41 | 25 | 16 | 64.0 % | 148 | 82 | 66 | 80.5 % | ||
End of Period | 983 | 815 | 168 | 20.6 % | 983 | 815 | 168 | 20.6 % | ||
ASP (Average sales price): | ||||||||||
Beginning of Period | $ 12,330 | $ 11,110 | $ 1,220 | 11.0 % | $ 11,310 | $ 10,808 | $ 502 | 4.6 % | ||
End of Period | $ 11,855 | $ 11,175 | $ 680 | 6.1 % | $ 11,855 | $ 11,175 | $ 680 | 6.1 % | ||
B2C ARR (Annual recurring revenue*): | ||||||||||
Beginning of Period | $ 3,954,090 | $ - | $ 3,954,090 | $ - | $ - | $ - | ||||
Incremental ARR | 948,885 | - | 948,885 | NM | 4,902,975 | - | 4,902,975 | NM | ||
End of Period | $ 4,902,975 | $ - | $ 4,902,975 | NM | $ 4,902,975 | $ - | $ 4,902,975 | NM | ||
Total ARR (Annualized recurring revenue): | $ 16,556,038 | $ 9,107,681 | $ 7,448,357 | 81.8 % | $ 16,556,038 | $ 9,107,681 | $ 7,448,357 | 81.8 % | ||
Transaction Customers: | ||||||||||
Corporate customers | 1,105 | 1,116 | (11) | -1.0 % | 1,086 | 986 | 100 | 10.1 % | ||
Academic customers | 321 | 301 | 20 | 6.6 % | 320 | 300 | 20 | 6.7 % | ||
Total customers | 1,426 | 1,417 | 9 | 0.6 % | 1,406 | 1,286 | 120 | 9.3 % | ||
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 March 31, | Nine Months Ended March 31, | |||||||||
2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | |||
Net Income (loss) | $ 76,301 | $ 236,842 | $ (160,541) | -67.8 % | $ (965,370) | $ 195,877 | $ (1,161,247) | NM | ||
Add (deduct): | - | |||||||||
Other income (expense) | (31,228) | (104,331) | 73,103 | -70.1 % | (547,965) | (218,095) | (329,870) | 151.3 % | ||
Foreign currency translation loss | 22,177 | (72,547) | 94,724 | NM | 15,059 | (84,210) | 99,269 | 117.9 % | ||
Provision for income taxes | 42,590 | 628 | 41,962 | NM | 82,049 | 5,543 | 76,506 | NM | ||
Depreciation and amortization | 309,898 | 18,332 | 291,566 | 1590.5 % | 525,267 | 30,486 | 494,781 | 1623.0 % | ||
Stock-based compensation | 541,002 | 480,458 | 60,544 | 12.6 % | 1,729,271 | 1,264,522 | 464,749 | 36.8 % | ||
Gain on sale of disc. ops. | - | - | - | - | - | - | ||||
Adjusted EBITDA | $ 960,740 | $ 559,382 | $ 401,358 | 71.8 % | $ 838,311 | $ 1,194,123 | $ (355,812) | -29.8 % | ||
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 | |||||||
March 31, | |||||||
2024 | June 30, | ||||||
(unaudited) | 2023 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 4,221,424 | $ | 13,545,333 | |||
Accounts receivable, net of allowance of | 7,323,379 | 6,153,063 | |||||
Prepaid expenses and other current assets | 635,000 | 400,340 | |||||
Prepaid royalties | 1,004,790 | 1,202,678 | |||||
Total current assets | 13,184,593 | 21,301,414 | |||||
Non-current assets: | |||||||
Property and equipment, net of accumulated depreciation of | 94,078 | 70,193 | |||||
Intangible assets, net of accumulated amortization of | 11,029,679 | 462,068 | |||||
Goodwill (provisional) | 16,493,763 | — | |||||
Deposits and other assets | 1,086 | 1,052 | |||||
Total assets | $ | 40,803,199 | $ | 21,834,727 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 9,011,868 | $ | 8,079,516 | |||
Deferred revenue | 8,870,316 | 6,424,724 | |||||
Total current liabilities | 17,882,184 | 14,504,240 | |||||
Non-current liabilities: | |||||||
Contingent earnout liability | 8,792,756 | — | |||||
Total liabilities | 26,674,940 | 14,504,240 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred stock; | — | — | |||||
Common stock; | 32,281 | 29,487 | |||||
Additional paid-in capital | 37,695,960 | 29,941,873 | |||||
Accumulated deficit | (23,488,019) | (22,522,649) | |||||
Accumulated other comprehensive loss | (111,963) | (118,224) | |||||
Total stockholders' equity | 14,128,259 | 7,330,487 | |||||
Total liabilities and stockholders' equity | $ | 40,803,199 | $ | 21,834,727 | |||
Research Solutions, Inc. and Subsidiaries Consolidated Statements of Operations and Other Comprehensive Loss (Unaudited) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
March 31, | March 31, | ||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||
Revenue: | |||||||||||||
Platforms | $ | 3,953,403 | $ | 2,249,632 | $ | 9,679,179 | $ | 6,379,871 | |||||
Transactions | 8,162,269 | 8,092,794 | 22,811,206 | 21,363,864 | |||||||||
Total revenue | 12,115,672 | 10,342,426 | 32,490,385 | 27,743,735 | |||||||||
Cost of revenue: | |||||||||||||
Platforms | 571,352 | 268,630 | 1,440,151 | 752,176 | |||||||||
Transactions | 6,062,388 | 6,046,523 | 17,052,934 | 16,211,211 | |||||||||
Total cost of revenue | 6,633,740 | 6,315,153 | 18,493,085 | 16,963,387 | |||||||||
Gross profit | 5,481,932 | 4,027,273 | 13,997,300 | 10,780,348 | |||||||||
Operating expenses: | |||||||||||||
Selling, general and administrative | 5,084,371 | 3,875,802 | 14,903,319 | 10,766,537 | |||||||||
Depreciation and amortization | 309,898 | 18,332 | 525,267 | 30,486 | |||||||||
Total operating expenses | 5,394,269 | 3,894,134 | 15,428,586 | 10,797,023 | |||||||||
Income (loss) from operations | 87,663 | 133,139 | (1,431,286) | (16,675) | |||||||||
Other income | 31,228 | 104,331 | 547,965 | 218,095 | |||||||||
Income (loss) from operations before provision for income taxes | 118,891 | 237,470 | (883,321) | 201,420 | |||||||||
Provision for income taxes | (42,590) | (628) | (82,049) | (5,543) | |||||||||
Net income (loss) | 76,301 | 236,842 | (965,370) | 195,877 | |||||||||
Other comprehensive income (loss): | |||||||||||||
Foreign currency translation | 858 | (4,149) | 6,261 | (2,801) | |||||||||
Comprehensive income (loss) | $ | 77,159 | $ | 232,693 | $ | (959,109) | $ | 193,076 | |||||
Basic income (loss) per common share: | |||||||||||||
Net income (loss) per share | $ | - | $ | 0.01 | $ | (0.03) | $ | 0.01 | |||||
Weighted average common shares outstanding | 30,020,652 | 26,929,314 | 28,377,199 | 26,820,557 | |||||||||
Diluted income (loss) per common share: | |||||||||||||
Net income (loss) per share | $ | - | $ | 0.01 | $ | (0.03) | $ | 0.01 | |||||
Weighted average common shares outstanding | 33,511,242 | 29,791,719 | 28,377,199 | 28,837,774 | |||||||||
Research Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) | |||||||
Nine Months Ended | |||||||
March 31, | |||||||
2024 | 2023 | ||||||
Cash flow from operating activities: | |||||||
Net income (loss) | $ | (965,370) | $ | 195,877 | |||
Adjustment to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 525,267 | 30,486 | |||||
Fair value of vested stock options | 104,502 | 338,973 | |||||
Fair value of vested restricted common stock | 1,603,820 | 925,550 | |||||
Fair value of vested unrestricted common stock | — | 68,272 | |||||
Modification cost of accelerated vesting of restricted common stock | 20,949 | — | |||||
Adjustment to contingent earnout liability | (268,287) | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (739,883) | (1,545,695) | |||||
Prepaid expenses and other current assets | (156,026) | (122,700) | |||||
Prepaid royalties | 197,888 | 47,760 | |||||
Accounts payable and accrued expenses | 498,584 | 947,789 | |||||
Deferred revenue | 768,347 | 986,044 | |||||
Net cash provided by operating activities | 1,589,791 | 1,872,356 | |||||
Cash flow from investing activities: | |||||||
Purchase of property and equipment | (57,761) | (29,976) | |||||
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 | (10,081,507) | (327,426) | |||||
Cash flow from financing activities: | |||||||
Proceeds from the exercise of stock options | — | 57,500 | |||||
Common stock repurchase | (522,024) | (74,556) | |||||
Payment of contingent acquisition consideration | (314,960) | — | |||||
Net cash used in financing activities | (836,984) | (17,056) | |||||
Effect of exchange rate changes | 4,791 | 1,850 | |||||
Net increase (decrease) in cash and cash equivalents | (9,323,909) | 1,529,724 | |||||
Cash and cash equivalents, beginning of period | 13,545,333 | 10,603,175 | |||||
Cash and cash equivalents, end of period | $ | 4,221,424 | $ | 12,132,899 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for income taxes | $ | 82,049 | $ | 5,543 | |||
Non-cash investing and financing activities: | |||||||
Contingent consideration accrual on asset acquisition | $ | 36,130 | $ | 144,384 | |||
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SOURCE Research Solutions, Inc.
FAQ
<p>What was Research Solutions' total revenue for the fiscal third quarter of 2024?</p>
Research Solutions reported a total revenue of $12.1 million in the fiscal third quarter of 2024.
<p>What was the percentage increase in the platform revenue for Research Solutions in the same quarter?</p>
The platform revenue increased by 76% for Research Solutions in the fiscal third quarter of 2024.
<p>What was the Annual Recurring Revenue (ARR) for Research Solutions at the end of the quarter?</p>
Research Solutions had an ARR of $16.6 million at the end of the fiscal third quarter of 2024.
<p>What was the company's net income for the quarter compared to the prior-year quarter?</p>
Research Solutions reported a net income of $76,000 for the fiscal third quarter of 2024, down from $237,000 in the prior-year quarter.
<p>Who is the President and CEO of Research Solutions?</p>
The President and CEO of Research Solutions is Roy W. Olivier.
<p>What are the new product offerings launched by Research Solutions?</p>
Research Solutions launched two new product offerings: Technology Landscape and Clinical Trial Landscape.
