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Research Solutions Reports Fiscal Second Quarter 2025 Results

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February 13, 2025 4:05 PM EST

Reports 23 Percent Increase in ARR to $19.1 Million and 61 Net New Platform Deployments

HENDERSON, Nev., Feb. 13, 2025 /PRNewswire/ -- Research Solutions, Inc. (NASDAQ: RSSS), the leading AI-powered research workflow platform, reported financial results for its fiscal second quarter ended December 31, 2024.

Fiscal Second Quarter 2025 Summary

  • Total revenue of $11.9 million, a 15.5% increase from the prior-year quarter.
  • Platform revenue up 47% to $4.6 million. Platform revenue accounted for 39% of total revenue as compared to 30% in the prior-year quarter.
  • Annual Recurring Revenue ("ARR") up 23% to $19.1 million, which includes approximately $12.7 million of B2B recurring revenue and $6.4 million of B2C recurring revenue.
  • Gross profit up 30% from the prior-year quarter. Total gross margin improved 540 basis points to 48.9%.
  • Net loss of $2.0 million or ($0.07) per share, compared to a net loss of ($54,000) or nil per share in the prior-year quarter. The quarter's results include a charge of approximately $2.4 million related to increasing the projected contingent earnout liability for Scite.
  • Adjusted EBITDA of $963,000 compared to $318,000 in the prior-year quarter.   The result is inclusive of $112,000 in commission fees related to the sale of stock by the Company's former Chairman.  On a trailing twelve-months ("TTM") basis, the Company has now generated Adjusted EBITDA of $4.6 million, which represents a 9.5% margin.
  • Cash flow from operations of over $1 million in the quarter, compared to $0.3 million in the prior-year quarter.

"Our second quarter results benefited from the continued recognition of the advantages and savings our products offer within the research process and the conclusion of the election cycle, which removed some near-term economic uncertainty. We experienced strong growth in both B2B and B2C ARR.  The 61 net new B2B platform deployments represent our best organic performance ever recorded in a quarter, and we also recorded a nearly $1 million sequential increase in B2C recurring revenue. The reported net loss in the quarter is related to the continued outperformance of Scite, which experienced strong academic B2B sales in the quarter in addition to B2C growth," said Roy W. Olivier, President and CEO of Research Solutions. "Lastly, I am delighted that during the quarter our former Chairman largely exited his ownership position, eliminating an overhang that had weighed down the stock price for some time, enabling that stock to be diversified across multiple new shareholders." 

Fiscal Second Quarter 2025 Results

Total revenue was $11.9 million, a 15.5% increase from $10.3 million in the year-ago quarter as both platform and transaction revenue increased from the prior period.

Platform subscription revenue increased 47% to $4.6 million compared to $3.1 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments and B2C subscribers, as well as upsells to existing customers. The quarter ended with annual recurring revenue of $19.1 million, up 23% year-over-year (see the company's definition of annual recurring revenue below).

Transaction revenue was $7.3 million, compared to $7.2 million in the second quarter of fiscal 2024. The increase was primarily due to increased copyright revenues. The transaction customer count for the quarter was 1,384, compared to 1,398 customers in the prior-year quarter (see the Company's definition of active customer accounts and transactions below).

Total gross margin improved 540 basis points from the prior-year quarter to 48.9%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platforms business as well as increased margins in that business.

Total operating expenses were $5.7 million, compared to $4.9 million in the second quarter of 2024. The increases were related to additional costs in Sales and Marketing and Technology and Product Development, which include having a full quarter of Scite expenses in the period, compared to one month in the prior-year quarter.  There was also an increase in non-cash depreciation and amortization expense associated with the acquisitions completed in fiscal year 2024.

Net loss for the second quarter was $2.0 million, or ($0.07) per share, compared to net loss of ($54,000), or nil per share, in the prior-year quarter. The quarter's results include a provision of approximately $2.4 million related to increasing the projected contingent earnout liability for Scite. Adjusted EBITDA was $963,0000, compared to $318,000 in the year-ago quarter (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 13, 2025
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-203-518-9848
Conference ID: RESEARCH

The conference call will be broadcast live and available for replay until March 13, 2025 by dialing  1-412-317-6671 and using the replay ID 11157678, 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,



2024

2023

Change

% Change


2024

2023

Change

% Change

Revenue:











Platforms

$     4,601,257

$     3,125,584

$    1,475,673

47.2 %


$     8,930,902

$     5,725,776

$    3,205,126

56.0 %


Transactions

$     7,312,962

$     7,188,158

124,804

1.7 %


$   15,027,799

$   14,648,937

378,862

2.6 %

Total Revenue

11,914,219

10,313,742

1,600,477

15.5 %


23,958,701

20,374,713

3,583,988

17.6 %











Gross Profit:











Platforms

3,981,415

2,639,399

1,342,016

50.8 %


7,763,893

4,856,977

2,906,916

59.9 %


Transactions

1,839,678

1,844,403

(4,725)

-0.3 %


3,823,076

3,658,391

164,685

4.5 %

Total Gross Profit

5,821,093

4,483,802

1,337,291

29.8 %


11,586,969

8,515,368

3,071,601

36.1 %











Gross profit as a % of revenue:











Platforms

86.5 %

84.4 %

2.1 %



86.9 %

84.8 %

2.1 %



Transactions

25.2 %

25.7 %

-0.5 %



25.4 %

25.0 %

0.5 %


Total Gross Profit

48.9 %

43.5 %

5.4 %



48.4 %

41.8 %

6.6 %












Operating Expenses:











Sales and marketing

1,343,087

804,927

538,160

66.9 %


2,533,494

1,489,943

1,043,551

70.0 %


Technology and product development

1,506,849

1,336,558

170,291

12.7 %


2,879,607

2,581,137

298,470

11.6 %


General and administrative

2,008,201

2,023,848

(15,648)

-0.8 %


3,938,377

4,566,717

(628,340)

-13.8 %


Depreciation and amortization

306,233

155,749

150,484

96.6 %


618,328

215,369

402,959

187.1 %


Stock-based compensation

534,322

596,455

(62,133)

-10.4 %


952,311

1,188,269

(235,958)

-19.9 %


Foreign currency translation loss

29,554

(13,738)

43,292

NM


(74,686)

(7,118)

(67,568)

949.3 %

Total Operating Expenses

5,728,246

4,903,799

824,446

16.8 %


10,847,431

10,034,317

813,114

8.1 %

Income (loss) from operations

92,847

(419,997)

512,844

122.1 %


739,538

(1,518,949)

2,258,487

148.7 %











Other Income (Expenses):











Other income

(2,057,887)

376,426

(2,434,313)

NM


(1,989,362)

516,737

(2,506,099)

NM


Provision for income taxes

(15,194)

(10,057)

(5,137)

51.1 %


(61,406)

(39,459)

(21,947)

55.6 %

Total Other Income (Expenses):

(2,073,081)

366,369

(2,439,450)

NM


(2,050,768)

477,278

(2,528,046)

NM

Net income (loss)

$    (1,980,234)

$        (53,628)

(1,926,606)

NM


$   (1,311,230)

$   (1,041,671)

(269,559)

NM










NM

Adjusted EBITDA

$        962,956

$        318,469

$       644,487

202.4 %


$     2,235,491

$      (122,429)

$    2,357,920

-1926.0 %














Quarter Ended December 31,


Six Months Ended December 31,



2024

2023

Change

% Change


2024

2023

Change

% Change

Platforms:











B2B ARR (Annual recurring revenue*):











  Beginning of Period

$   12,187,834

$   11,020,241

$    1,167,593

10.6 %


$   12,060,201

$     9,444,130

$    2,616,071

27.7 %


   Incremental ARR

550,422

594,507

(44,085)

-7.4 %


678,055

2,170,618

(1,492,563)

-68.8 %


  End of Period

$   12,738,256

$   11,614,748

$    1,123,508

9.7 %


$   12,738,256

$   11,614,748

$    1,123,508

9.7 %












Deployments:











  Beginning of Period

1,029

880

149

16.9 %


1,021

835

186

22.3 %


   Incremental Deployments

61

62

(1)

-1.6 %


69

107

(38)

-35.5 %


  End of Period

1,090

942

148

15.7 %


1,090

942

148

15.7 %












ASP (Average sales price):











  Beginning of Period

$          11,844

$          12,523

$             (679)

-5.4 %


$          11,812

$          11,310

$              502

4.4 %


  End of Period

$          11,686

$          12,330

$             (643)

-5.2 %


$          11,686

$          12,330

$            (643)

-5.2 %













B2C ARR (Annual recurring revenue*):











  Beginning of Period

$     5,430,795

$                 -

$    5,430,795

NM


$     5,363,129

$                 -

$    5,363,129

NM


   Incremental ARR

940,586

3,954,090

(3,013,504)

NM


1,008,252

3,954,090

(2,945,838)

NM


  End of Period

$     6,371,381

$     3,954,090

$    2,417,291

61.1 %


$     6,371,381

$     3,954,090

$    2,417,291

61.1 %













Total ARR (Annualized recurring revenue):

$   19,109,637

$   15,568,838

$    3,540,799

22.7 %


$   19,109,637

$   15,568,838

$    3,540,799

22.7 %












Transaction Customers:











Corporate customers

1,051

1,065

(14)

-1.3 %


1,063

1,078

(15)

-1.3 %


Academic customers

333

333

-

0.0 %


325

319

6

1.9 %


Total customers

1,384

1,398

(14)

-1.0 %


1,388

1,397

(9)

-0.6 %

 

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) including any change in fair value of contingent earnout liability, foreign currency transaction loss, provision for income taxes, depreciation and amortization, stock-based compensation, 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,




2024

2023

Change

% Change


2024

2023

Change

% Change


Net Income (loss)

$    (1,980,234)

$        (53,628)

$   (1,926,606)

NM


$   (1,311,230)

$   (1,041,671)

$     (269,559)

NM


 Add (deduct):








-




Other (income) expense

2,057,887

(376,426)

2,434,313

NM


1,989,362

(516,737)

2,506,099

NM



Foreign currency translation loss (gain)

29,554

(13,738)

43,292

NM


(74,686)

(7,118)

(67,568)

949.3 %



Provision for income taxes

15,194

10,057

5,137

51.1 %


61,406

39,459

21,947

55.6 %



Depreciation and amortization

306,233

155,749

150,484

96.6 %


618,328

215,369

402,959

187.1 %



Stock-based compensation

534,322

596,455

(62,133)

-10.4 %


952,311

1,188,269

(235,958)

-19.9 %


 Adjusted EBITDA

$        962,956

$        318,469

$       644,487

202.4 %


$     2,235,491

$      (122,429)

$    2,357,920

1926.0 %


 

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, 






2024


June 30, 




(unaudited)


2024


Assets








Current assets:








Cash and cash equivalents


$

7,701,155


$

6,100,031


Accounts receivable, net of allowance of $129,895 and $68,579, respectively



7,116,055



6,879,800


Prepaid expenses and other current assets



742,166



643,553


Prepaid royalties



589,068



1,067,237


Total current assets



16,148,444



14,690,621










Non-current assets:








Property and equipment, net of accumulated depreciation of $932,773 and $922,558, respectively



63,355



88,011


Intangible assets, net of accumulated amortization of $2,129,868 and $1,535,310, respectively



10,230,439



10,764,261


Goodwill



16,345,888



16,315,888


Deposits and other assets



867



981


Total assets


$

42,788,993


$

41,859,762










Liabilities and Stockholders' Equity








Current liabilities:








Accounts payable and accrued expenses


$

8,104,118


$

8,843,612


Deferred revenue



8,853,415



9,023,848


Contingent earnout liability, current portion



3,963,956



—


Total current liabilities



20,921,489



17,867,460










Non-current liabilities:








Contingent earnout liability, long-term portion



10,741,044



12,298,114


Total liabilities



31,662,533



30,165,574










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; 32,640,407 and 32,295,373 shares
issued and outstanding, respectively



32,640



32,295


Additional paid-in capital



38,836,646



38,089,958


Accumulated deficit



(27,620,476)



(26,309,246)


Accumulated other comprehensive loss



(122,350)



(118,819)


Total stockholders' equity



11,126,460



11,694,188


Total liabilities and stockholders' equity


$

42,788,993


$

41,859,762


 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)


















Three Months Ended


Six Months Ended




December 31, 


December 31, 




2024


2023


2024


2023
















Revenue:














Platforms


$

4,601,257


$

3,125,584


$

8,930,902


$

5,725,776


Transactions



7,312,962



7,188,158



15,027,799



14,648,937


Total revenue



11,914,219



10,313,742



23,958,701



20,374,713
















Cost of revenue:














Platforms



619,842



486,185



1,167,009



868,799


Transactions



5,473,284



5,343,755



11,204,723



10,990,546


Total cost of revenue



6,093,126



5,829,940



12,371,732



11,859,345


Gross profit



5,821,093



4,483,802



11,586,969



8,515,368
















Operating expenses:














Selling, general and administrative



5,422,013



4,748,050



10,229,103



9,818,948


Depreciation and amortization



306,233



155,749



618,328



215,369


Total operating expenses



5,728,246



4,903,799



10,847,431



10,034,317
















Income (loss) from operations



92,847



(419,997)



739,538



(1,518,949)
















Other income



348,999



108,194



417,524



248,505


Change in fair value of contingent earnout liability



(2,406,886)



268,232



(2,406,886)



268,232
















Loss before provision for income taxes



(1,965,040)



(43,571)



(1,249,824)



(1,002,212)


Provision for income taxes



(15,194)



(10,057)



(61,406)



(39,459)
















Net loss



(1,980,234)



(53,628)



(1,311,230)



(1,041,671)
















Other comprehensive income (loss):














Foreign currency translation



2,637



6,349



(3,531)



5,403


Comprehensive loss


$

(1,977,597)


$

(47,279)


$

(1,314,761)


$

(1,036,268)
















Loss per common share:














Net loss per share, basic and diluted


$

(0.07)


$

-


$

(0.04)


$

(0.04)


Weighted average common shares outstanding, basic and diluted



30,421,808



28,092,945



30,384,339



27,564,404


 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)












Six Months Ended




December 31, 




2024


2023










Cash flow from operating activities:








Net loss


$

(1,311,230)


$

(1,041,671)


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








Depreciation and amortization



618,328



215,369


Stock options expense



88,045



61,714


Restricted common stock expense



864,266



1,105,606


Modification cost of accelerated vesting of restricted common stock



—



20,949


Adjustment to contingent earnout liability



2,406,886



(268,232)


Changes in operating assets and liabilities:








Accounts receivable



(266,255)



(681,502)


Prepaid expenses and other current assets



(98,613)



(67,986)


Prepaid royalties



478,169



121,100


Accounts payable and accrued expenses



(737,670)



349,310


Deferred revenue



(170,433)



(241,545)


Net cash provided by (used in) operating activities



1,871,493



(426,888)










Cash flow from investing activities:








Purchase of property and equipment



(5,404)



(55,763)


Payment for acquisition of Resolute, net of cash acquired



—



(2,718,253)


Payment for acquisition of Scite, net of cash acquired



—



(7,305,493)


Net cash used in investing activities



(5,404)



(10,079,509)










Cash flow from financing activities:








Common stock repurchase



(205,278)



(68,748)


Payment of contingent acquisition consideration



(62,560)



(278,195)


Net cash used in financing activities



(267,838)



(346,943)










Effect of exchange rate changes



2,873



5,666


Net increase (decrease) in cash and cash equivalents



1,601,124



(10,847,674)


Cash and cash equivalents, beginning of period



6,100,031



13,545,333


Cash and cash equivalents, end of period


$

7,701,155


$

2,697,659










Supplemental disclosures of cash flow information:








Cash paid for income taxes


$

61,406


$

39,459










Non-cash investing and financing activities:








Contingent consideration accrual on asset acquisition


$

30,198


$

36,364


 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/research-solutions-reports-fiscal-second-quarter-2025-results-302376348.html

SOURCE Research Solutions, Inc.


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