Reports 16% Revenue Increase and ARR over
$11.0 Million
HENDERSON, Nev., Nov. 9, 2023
/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 first quarter ended September 30, 2023.
Fiscal First Quarter 2024 Summary
- Total revenue of $10.1 million, a
16% increase from the prior-year quarter.
- Platform revenue up 29% to $2.6 million. Annual Recurring
Revenue ("ARR") of over $11.0 million.
- Gross profit up 20% from prior-year quarter. Total gross margin
improved 150 basis points to 40.1%.
- Loss of ($988,000) or
($0.04) per share, compared to net
income of $215,000 or $0.01 per diluted share in the prior-year
quarter. This quarter's loss includes $1.161M in expenses itemized as follows:
$339,000 in costs associated with
M&A activities, $542,000 in
proxy-related expenses and $280,000
in separation costs related to the termination of the Executive
Chairman.
- Adjusted EBITDA of ($441,000)
compared to $433,000 in the
prior-year quarter. The Adjusted EBITDA result includes
approximately $1.078M in costs
related to the M&A activities, proxy-related expenses and
separation expenses noted above. Without these costs,
Adjusted EBITDA would have been approximately $637,000.
- The company closed its acquisition of Resolute Innovation, Inc.
("ResoluteAI") on July 28, 2023. The
numbers for the quarter are inclusive of approximately two months
of activity from ResoluteAI.
"Our first quarter results reflect the continued growth across
our platform and transaction offerings and our acquisition of
ResoluteAI completed in late July, which helped push our ARR over
$11 million," said Roy W. Olivier, President and CEO of Research
Solutions. "We continue to experience softer growth in our platform
products due to ongoing inflationary pressures and budgetary
constraints, however, our profit performance remained strong when
you exclude a number of unique items that impacted our first
quarter. Lasty, we continue to be active in the M&A
market with additional potential transactions that we believe will
help complete our product set and enhance our growth
profile."
Fiscal First Quarter 2024 Results
Total revenue was $10.1 million, a
16% 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 29% to $2.6 million compared to $2.0 million in the year-ago quarter. The
increase was primarily due to an increase in the total number of
paid Platform deployments and the acquisition of ResoluteAI, as
well as upsells to existing customers. When consolidating ARR from
the ResoluteAI acquisition, the quarter ended with annual recurring
revenue of $11.0 million, up 32%
year-over-year (see the company's definition of annual recurring
revenue below).
Transaction revenue was $7.5
million, compared to $6.7
million in the first quarter of fiscal 2023. The increase
was primarily due to organic growth and higher transaction volumes
related to contracts transferred from FIZ Karlsruhe effective on
January 1, 2023. The transaction
customer count for the quarter was 1,395, compared to 1,220
customers in the prior-year quarter (see the company's definition
of active customer accounts and transactions below).
Total gross margin improved 150 basis points from the prior-year
quarter to 40.1%. The increase was primarily driven by a continued
revenue mix shift to the higher-margin Platforms business as well
as increased margins in the transactions business.
Total operating expenses were $5.1
million, compared to $3.2
million in the first quarter of 2023. This quarter's results
include $339,000 in expenses related
to the Company's M&A activities, $542,000 in proxy-related expenses and
$280,000 in separation costs related
to the termination of the Executive Chairman.
Net loss in the first quarter was ($988,000), or ($0.04) per share, compared to net income of
$215,000, or $0.01 per diluted share, in the prior-year
quarter. Adjusted EBITDA was ($441,000), compared to $433,000 in the year-ago quarter. The net
loss result included the $1.161M of
itemized operating costs noted above and the Adjusted EBITDA result
is inclusive of approximately $1.078M
of those costs (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, November 9,
2023
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-631-891-4304
Conference ID: 10022638
The conference call will be broadcast live and available for
replay until December 9, 2023 by
dialing 1-412-317-6671 and using the replay ID 10022638, and
via the investor relations section of the company's website at
http://researchsolutions.investorroom.com/.
Fiscal First Quarter Financial and Operational Summary Tables
vs. Prior-Year Quarter
|
|
Quarter Ended
September 30,
|
|
|
2023
|
2022
|
Change
|
%
Change
|
Revenue:
|
|
|
|
|
|
Platforms
|
$ 2,600,192
|
$
2,019,967
|
$
580,225
|
28.7 %
|
|
Transactions
|
7,460,779
|
6,664,676
|
796,103
|
11.9 %
|
Total
Revenue
|
10,060,971
|
8,684,643
|
1,376,328
|
15.8 %
|
|
|
|
|
|
Gross
Profit:
|
|
|
|
|
|
Platforms
|
2,217,577
|
1,789,494
|
428,083
|
23.9 %
|
|
Transactions
|
1,813,988
|
1,559,754
|
254,234
|
16.3 %
|
Total Gross
Profit
|
4,031,565
|
3,349,248
|
682,317
|
20.4 %
|
|
|
|
|
|
Gross profit as a % of
revenue:
|
|
|
|
|
|
Platforms
|
85.3 %
|
88.6 %
|
-3.3 %
|
|
|
Transactions
|
24.3 %
|
23.4 %
|
0.9 %
|
|
Total Gross
Profit
|
40.1 %
|
38.6 %
|
1.5 %
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
Sales and
marketing
|
685,016
|
521,216
|
163,800
|
31.4 %
|
|
Technology and product
development
|
1,244,579
|
875,290
|
369,289
|
42.2 %
|
|
General and
administrative
|
2,542,869
|
1,519,424
|
1,023,445
|
67.4 %
|
|
Depreciation and
amortization
|
59,620
|
5,812
|
53,808
|
925.8 %
|
|
Stock-based
compensation
|
591,814
|
175,361
|
416,453
|
237.5 %
|
|
Foreign currency
translation loss
|
6,620
|
72,516
|
(65,896)
|
-90.9 %
|
Total Operating
Expenses
|
5,130,518
|
3,169,619
|
1,960,899
|
61.9 %
|
Income (loss) from
operations
|
(1,098,952)
|
179,629
|
(1,278,581)
|
-711.8 %
|
|
|
|
|
|
Other Income
(Expenses):
|
|
|
|
|
|
Other income
|
140,311
|
39,069
|
101,242
|
259.1 %
|
|
Provision for income
taxes
|
(29,402)
|
(4,133)
|
(25,269)
|
611.4 %
|
Total Other Income
(Expenses):
|
110,909
|
34,936
|
75,973
|
217.5 %
|
Net income
(loss)
|
$ (988,043)
|
$ 214,565
|
(1,202,608)
|
-560.5 %
|
|
|
|
|
|
Adjusted
EBITDA
|
$ (440,898)
|
$ 433,318
|
$ (874,216)
|
-201.7 %
|
|
|
|
|
|
|
|
|
Quarter Ended
September 30,
|
|
|
2023
|
2022
|
Change
|
%
Change
|
Platforms:
|
|
|
|
|
|
ARR (Annual recurring
revenue):
|
|
|
|
|
|
Beginning of
Period
|
$ 9,444,130
|
$
7,922,188
|
$
1,521,942
|
19.2 %
|
|
Incremental ARR
|
1,576,111
|
409,582
|
1,166,529
|
284.8 %
|
|
End of
Period
|
$
11,020,241
|
$
8,331,770
|
$
2,688,471
|
32.3 %
|
|
|
|
|
|
|
Deployments:
|
|
|
|
|
|
Beginning of
Period
|
835
|
733
|
102
|
13.9 %
|
|
Incremental Deployments
|
45
|
23
|
22
|
95.7 %
|
|
End of
Period
|
880
|
756
|
124
|
16.4 %
|
|
|
|
|
|
|
ASP (Average sales
price):
|
|
|
|
|
|
Beginning of
Period
|
$
11,310
|
$
10,808
|
$
502
|
4.6 %
|
|
End of
Period
|
$
12,523
|
$
11,021
|
$
1,502
|
13.6 %
|
|
|
|
|
|
Transaction
Customers:
|
|
|
|
|
|
Corporate
customers
|
1,090
|
922
|
168
|
18.2 %
|
|
Academic
customers
|
305
|
298
|
7
|
2.3 %
|
|
Total
customers
|
1,395
|
1,220
|
175
|
14.3 %
|
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.
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
September 30,
|
|
|
2023
|
2022
|
Change
|
%
Change
|
Net Income
(loss)
|
$ (988,043)
|
$ 214,565
|
$
(1,202,608)
|
-560.5 %
|
Add
(deduct):
|
|
|
|
|
|
Other income
(expense)
|
(140,311)
|
(39,069)
|
(101,242)
|
259.1 %
|
|
Foreign currency
translation loss
|
6,620
|
72,516
|
(65,896)
|
-90.9 %
|
|
Provision for income
taxes
|
29,402
|
4,133
|
25,269
|
611.4 %
|
|
Depreciation and
amortization
|
59,620
|
5,812
|
53,808
|
925.8 %
|
|
Stock-based
compensation
|
591,814
|
175,361
|
416,453
|
237.5 %
|
|
Gain on sale of disc.
ops.
|
-
|
-
|
-
|
|
Adjusted
EBITDA
|
$ (440,898)
|
$ 433,318
|
$ (874,216)
|
-201.7 %
|
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 additional customers, potential acquisitions 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
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
2023
|
|
June 30,
|
|
|
|
(unaudited)
|
|
2023
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
9,882,064
|
|
$
|
13,545,333
|
|
Accounts receivable,
net of allowance of $82,392 and $85,015, respectively
|
|
|
6,460,188
|
|
|
6,153,063
|
|
Prepaid expenses and
other current assets
|
|
|
314,052
|
|
|
400,340
|
|
Prepaid
royalties
|
|
|
1,167,538
|
|
|
1,202,678
|
|
Total current
assets
|
|
|
17,823,842
|
|
|
21,301,414
|
|
|
|
|
|
|
|
|
|
Goodwill
(provisional)
|
|
|
3,238,794
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
Property and equipment,
net of accumulated depreciation of $891,299 and $881,908,
respectively
|
|
|
91,326
|
|
|
70,193
|
|
Intangible assets, net
of accumulated amortization of $795,915 and $747,355,
respectively
($2,064,706 provisional)
|
|
|
2,528,259
|
|
|
462,068
|
|
Deposits and other
assets
|
|
|
1,033
|
|
|
1,052
|
|
Total
assets
|
|
$
|
23,683,254
|
|
$
|
21,834,727
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
8,541,564
|
|
$
|
8,079,516
|
|
Deferred
revenue
|
|
|
6,387,470
|
|
|
6,424,724
|
|
Total current
liabilities
|
|
|
14,929,034
|
|
|
14,504,240
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Contingent earnout
liability
|
|
|
1,867,043
|
|
|
—
|
|
Total
liabilities
|
|
|
16,796,077
|
|
|
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; 29,624,085 and
29,487,508 shares issued and outstanding,
respectively
|
|
|
29,624
|
|
|
29,487
|
|
Additional paid-in
capital
|
|
|
30,487,415
|
|
|
29,941,873
|
|
Accumulated
deficit
|
|
|
(23,510,692)
|
|
|
(22,522,649)
|
|
Accumulated other
comprehensive loss
|
|
|
(119,170)
|
|
|
(118,224)
|
|
Total stockholders'
equity
|
|
|
6,887,177
|
|
|
7,330,487
|
|
Total liabilities
and stockholders' equity
|
|
$
|
23,683,254
|
|
$
|
21,834,727
|
|
Research Solutions,
Inc. and Subsidiaries
Consolidated
Statements of Operations and Other Comprehensive
Loss
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Platforms
|
|
$
|
2,600,192
|
|
$
|
2,019,967
|
|
Transactions
|
|
|
7,460,779
|
|
|
6,664,676
|
|
Total
revenue
|
|
|
10,060,971
|
|
|
8,684,643
|
|
|
|
|
|
|
|
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Platforms
|
|
|
382,615
|
|
|
230,473
|
|
Transactions
|
|
|
5,646,791
|
|
|
5,104,922
|
|
Total cost of
revenue
|
|
|
6,029,406
|
|
|
5,335,395
|
|
Gross profit
|
|
|
4,031,565
|
|
|
3,349,248
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
5,070,897
|
|
|
3,163,807
|
|
Depreciation and
amortization
|
|
|
59,620
|
|
|
5,812
|
|
Total operating
expenses
|
|
|
5,130,517
|
|
|
3,169,619
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
|
(1,098,952)
|
|
|
179,629
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
140,311
|
|
|
39,069
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations before provision for income taxes
|
|
|
(958,641)
|
|
|
218,698
|
|
Provision for income
taxes
|
|
|
(29,402)
|
|
|
(4,133)
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
(988,043)
|
|
|
214,565
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
Foreign currency
translation
|
|
|
(946)
|
|
|
(5,176)
|
|
Comprehensive income
(loss)
|
|
$
|
(988,989)
|
|
$
|
209,389
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per
common share:
|
|
|
|
|
|
|
|
Net income (loss) per
share
|
|
$
|
(0.04)
|
|
$
|
0.01
|
|
Weighted average
common shares outstanding
|
|
|
27,052,445
|
|
|
26,718,171
|
|
|
|
|
|
|
|
|
|
Diluted income (loss)
per common share:
|
|
|
|
|
|
|
|
Net income (loss) per
share
|
|
$
|
(0.04)
|
|
$
|
0.01
|
|
Weighted average
common shares outstanding
|
|
|
27,052,445
|
|
|
27,779,841
|
|
Research Solutions,
Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Cash flow from
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(988,043)
|
|
$
|
214,565
|
|
Adjustment to reconcile
net income (loss) to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
59,620
|
|
|
5,812
|
|
Fair value of vested
stock options
|
|
|
17,471
|
|
|
40,706
|
|
Fair value of vested
restricted common stock
|
|
|
574,343
|
|
|
134,655
|
|
Fair value of vested
unrestricted common stock
|
|
|
—
|
|
|
68,272
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(112,965)
|
|
|
81,756
|
|
Prepaid expenses and
other current assets
|
|
|
109,946
|
|
|
70,908
|
|
Prepaid
royalties
|
|
|
35,140
|
|
|
710,640
|
|
Accounts payable and
accrued expenses
|
|
|
195,747
|
|
|
(1,037,057)
|
|
Deferred
revenue
|
|
|
(646,830)
|
|
|
(181,378)
|
|
Net cash provided by
(used in) operating activities
|
|
|
(755,571)
|
|
|
108,879
|
|
|
|
|
|
|
|
|
|
Cash flow from
investing activities:
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(33,825)
|
|
|
(3,681)
|
|
Payment for
acquisition, net of cash acquired
|
|
|
(2,718,253)
|
|
|
—
|
|
Payment for
non-refundable deposit for asset acquisition
|
|
|
—
|
|
|
(297,450)
|
|
Net cash used in
investing activities
|
|
|
(2,752,078)
|
|
|
(301,131)
|
|
|
|
|
|
|
|
|
|
Cash flow from
financing activities:
|
|
|
|
|
|
|
|
Common stock
repurchase
|
|
|
(46,135)
|
|
|
(18,062)
|
|
Payment of contingent
acquisition consideration
|
|
|
(110,190)
|
|
|
—
|
|
Net cash used in
financing activities
|
|
|
(156,325)
|
|
|
(18,062)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes
|
|
|
705
|
|
|
(5,172)
|
|
Net decrease in cash
and cash equivalents
|
|
|
(3,663,269)
|
|
|
(215,486)
|
|
Cash and cash
equivalents, beginning of period
|
|
|
13,545,333
|
|
|
10,603,175
|
|
Cash and cash
equivalents, end of period
|
|
$
|
9,882,064
|
|
$
|
10,387,689
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
Cash paid for income
taxes
|
|
$
|
29,402
|
|
$
|
4,133
|
|
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
Contingent
consideration accrual on asset acquisition
|
|
$
|
42,989
|
|
$
|
—
|
|
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SOURCE Research Solutions, Inc.