Research Solutions Reports Fiscal Third Quarter 2023 Results

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May 11, 2023 4:10 PM EDT

Reports 18% Revenue Increase and 24% Increase in ARR to $9.1 Million

HENDERSON, Nev., May 11, 2023 /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 third quarter ended March 31, 2023.

Fiscal Third Quarter 2023 Summary

  • Total revenue of $10.3 million, an 18.1% increase from prior-year quarter and the Company's first reported quarter of over $10 million in revenue
  • Platform revenue up 26% to $2.2 million. Annual Recurring Revenue ("ARR") up 24% to $9.1 million.
  • Gross profit up 24% from prior-year quarter. Total gross margin improved 190 basis points to 38.9%.
  • Earnings of $0.01 per diluted share, compared to a loss of $0.01 per share in the prior-year quarter. Fiscal year to date net income of $0.01 per diluted share, compared to a loss of $0.05 in the same fiscal year to date period in the prior-year.
  • Adjusted EBITDA of $559,000 compared to $94,000 in the prior-year quarter
  • Positive cash flow from operations of $0.8 million for the quarter and $1.9 million fiscal year to date, compared to negative cash flow from operations of $0.4 million in the same fiscal year to date period in the prior-year

"Our third quarter results reflect the continued adoption of our platform by new customers and a 16% revenue increase in our transactions business, due to both organic growth and the successful transition of customer contracts from FIZ Karlsruhe, which took effect on January 1, 2023," said Roy W. Olivier, President and CEO of Research Solutions. "Platform growth remained challenging in the quarter as our customers continue to extend sales cycles and operate under tightened budgets. Our profitability, however, has allowed us to continue to invest in marketing and product development, with some important product features being successfully released in the quarter. We feel well positioned to execute as the economic environment improves and believe our products will be even more relevant to our research customers."

Fiscal Third Quarter 2023 Results

Total revenue was $10.3 million, an 18.1% increase from $8.8 million in the year-ago quarter as both platform and transaction revenue increased from the prior period.

Platform subscription revenue increased 26% to $2.2 million compared to $1.8 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 25 net deployments added in the quarter, as well as upsells to existing customers. The quarter ended with annual recurring revenue of $9.1 million, up 24% year-over-year (see the company's definition of annual recurring revenue below).

Transaction revenue was $8.1 million, compared to $7.0 million in the third quarter of fiscal 2022. 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 1,417, compared to 1,193 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).

Total gross margin improved 190 basis points from the prior-year quarter to 38.9%. 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 $3.9 million, compared to $3.6 million in the third quarter of 2022. The increase was primarily due to higher sales and marketing and general and administrative costs, the latter related to recruiting fees expensed in the period.

Net income in the third quarter was $237,000, or $0.01 per diluted share, compared to a net loss of ($341,000), or ($0.01) per share, in the prior-year quarter. Adjusted EBITDA was $559,000, compared to $94,000 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, May 11, 2023
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-412-317-5180
Conference ID: 10178138

The conference call will be broadcast live and available for replay until June 11, 2023 by dialing  1-412-317-6671 and using the replay ID 10178138, 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,



2023

2022

Change

% Change


2023

2022

Change

% Change

Revenue:











Platforms

$   2,249,632

$   1,786,224

$      463,408

25.9 %


$     6,379,871

$     4,900,927

$    1,478,944

30.2 %


Transactions

$   8,092,794

$   6,971,128

1,121,666

16.1 %


$   21,363,864

$   19,471,216

1,892,648

9.7 %

Total Revenue

10,342,426

8,757,352

1,585,074

18.1 %


27,743,735

24,372,143

3,371,592

13.8 %











Gross Profit:











Platforms

1,981,002

1,567,173

413,829

26.4 %


5,627,695

4,204,552

1,423,144

33.8 %


Transactions

2,046,271

1,671,324

374,947

22.4 %


5,152,653

4,531,980

620,673

13.7 %

Total Gross Profit

4,027,273

3,238,497

788,776

24.4 %


10,780,348

8,736,532

2,043,817

23.4 %











Gross profit as a % of revenue:











Platforms

88.1 %

87.7 %

0.3 %



88.2 %

85.8 %

2.4 %



Transactions

25.3 %

24.0 %

1.3 %



24.1 %

23.3 %

0.8 %


Total Gross Profit

38.9 %

37.0 %

2.0 %



38.9 %

35.8 %

3.0 %












Operating Expenses:











Sales and marketing

642,624

543,496

99,128

18.2 %


1,830,448

1,584,804

245,644

15.5 %


Technology and product development

953,677

971,959

(18,282)

-1.9 %


2,751,099

2,661,655

89,444

3.4 %


General and administrative

1,871,591

1,629,371

242,220

14.9 %


5,004,678

4,742,729

261,950

5.5 %


Depreciation and amortization

18,332

4,988

13,344

267.5 %


30,486

12,144

18,342

151.0 %


Stock-based compensation

480,458

399,234

81,224

20.3 %


1,264,522

870,883

393,639

45.2 %


Foreign currency translation loss (gain)

(72,547)

29,394

(101,941)

NM


(84,210)

52,619

(136,829)

NM

Total Operating Expenses

3,894,135

3,578,442

315,693

8.8 %


10,797,023

9,924,834

872,190

8.8 %

Income (loss) from operations

133,139

(339,944)

473,083

139.2 %


(16,675)

(1,188,302)

1,171,627

98.6 %











Other Income (Expenses):











Other income (expense)

104,331

237

104,094

NM


218,095

777

217,318

NM


Provision for income taxes

(628)

(822)

194

-23.6 %


(5,543)

(6,592)

1,049

15.9 %


Gain on sale of disc'd operations

-

-

-



-

-

-


Total Other Income (Expenses):

103,703

(585)

104,288

NM


212,552

(5,815)

218,367

NM

Net income (loss)

$      236,842

$    (340,529)

577,371

169.6 %


$        195,877

$   (1,194,117)

1,389,994

116.4 %





NM





NM

Adjusted EBITDA

$      559,382

$        93,672

$      465,710

497.2 %


$     1,194,123

$      (252,656)

$    1,446,779

NM














Quarter Ended March 31,


Nine Months Ended March 31,



2023

2022

Change

% Change


2023

2022

Change

% Change

Platforms:











ARR (Annual recurring revenue):











  Beginning of Period

$   8,776,977

$   6,848,613

$   1,928,363

28.2 %


$     7,922,188

$     5,880,179

$    2,042,009

34.7 %


   Incremental ARR

330,704

500,233

(169,529)

-33.9 %


1,185,493

1,468,668

(283,175)

-19.3 %


  End of Period

$   9,107,681

$   7,348,847

$   1,758,834

23.9 %


$     9,107,681

$     7,348,847

$    1,758,834

23.9 %












Deployments:











  Beginning of Period

790

646

144

22.3 %


733

553

180

32.5 %


   Incremental Deployments

25

34

(9)

-26.5 %


82

127

(45)

-35.4 %


  End of Period

815

680

135

19.9 %


815

680

135

19.9 %












ASP (Average sales price):











  Beginning of Period

$        11,110

$        10,602

$             509

4.8 %


$          10,808

$          10,633

$              175

1.6 %


  End of Period

$        11,175

$        10,807

$             368

3.4 %


$          11,175

$          10,807

$              368

3.4 %











Transaction Customers:











Corporate customers

1,116

904

212

23.5 %


986

875

112

12.8 %


Academic customers

301

289

12

4.2 %


300

300

-

0.0 %


Total customers

1,417

1,193

224

18.8 %


1,287

1,175

112

9.5 %

 

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 ("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 March 31,


Nine Months Ended March 31,



2023

2022

Change

% Change


2023

2022

Change

% Change

Net Income (loss)

$      236,842

$    (340,529)

$      577,371

169.6 %


$        195,877

$   (1,194,117)

$    1,389,994

116.4 %

 Add (deduct):








-



Other income (expense)

(104,331)

(237)

(104,094)

NM


(218,095)

(777)

(217,318)

NM


Foreign currency translation loss (gain)

(72,547)

29,394

(101,941)

NM


(84,210)

52,619

(136,829)

NM


Provision for income taxes

628

822

(194)

-23.6 %


5,543

6,592

(1,049)

-15.9 %


Depreciation and amortization

18,332

4,988

13,344

267.5 %


30,486

12,144

18,342

151.0 %


Stock-based compensation

480,458

399,234

81,224

20.3 %


1,264,522

870,883

393,639

45.2 %


Gain on sale of disc. ops.

-

-

-



-

-

-


 Adjusted EBITDA

$      559,382

$        93,672

$      465,710

497.2 %


$     1,194,123

$      (252,656)

$    1,446,779

NM

 

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 visitwww.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 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












March 31, 







2023


June 30, 




(unaudited)


2022


Assets








Current assets:








Cash and cash equivalents


$

12,132,899


$

10,603,175


Accounts receivable, net of allowance of $49,670 and $94,144, respectively



6,797,240



5,251,545


Prepaid expenses and other current assets



398,726



276,026


Prepaid royalties



798,892



846,652


Total current assets



20,127,757



16,977,398










Other assets:








Property and equipment, net of accumulated depreciation of $868,324 and $840,996, respectively



53,766



47,985


Intangible assets, net of accumulated amortization of $11,046 and $0, respectively



430,788



—


Deposits and other assets



997



893


Total assets


$

20,613,308


$

17,026,276










Liabilities and Stockholders' Equity








Current liabilities:








Accounts payable and accrued expenses


$

7,696,205


$

6,604,032


Deferred revenue



6,524,570



5,538,526


Total current liabilities



14,220,775



12,142,558










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; 29,500,764 and 27,075,648 shares
issued and outstanding, respectively



29,501



27,076


Additional paid-in capital



29,386,169



28,072,855


Accumulated deficit



(22,898,395)



(23,094,272)


Accumulated other comprehensive loss



(124,742)



(121,941)


Total stockholders' equity



6,392,533



4,883,718


Total liabilities and stockholders' equity


$

20,613,308


$

17,026,276


 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

















Three Months Ended


Nine Months Ended




March 31, 


March 31, 




2023


2022


2023


2022
















Revenue:














Platforms


$

2,249,632


$

1,786,224


$

6,379,871


$

4,900,927


Transactions



8,092,794



6,971,128



21,363,864



19,471,216


Total revenue



10,342,426



8,757,352



27,743,735



24,372,143
















Cost of revenue:














Platforms



268,630



219,051



752,176



696,375


Transactions



6,046,523



5,299,804



16,211,211



14,939,236


Total cost of revenue



6,315,153



5,518,855



16,963,387



15,635,611


Gross profit



4,027,273



3,238,497



10,780,348



8,736,532
















Operating expenses:














Selling, general and administrative



3,875,802



3,573,454



10,766,537



9,912,690


Depreciation and amortization



18,332



4,988



30,486



12,144


Total operating expenses



3,894,134



3,578,442



10,797,023



9,924,834
















Income (loss) from operations



133,139



(339,945)



(16,675)



(1,188,302)
















Other income



104,331



237



218,095



777
















Income (loss) from operations before provision for income taxes



237,470



(339,708)



201,420



(1,187,525)


Provision for income taxes



(628)



(822)



(5,543)



(6,592)
















Net income (loss)



236,842



(340,530)



195,877



(1,194,117)
















Other comprehensive income (loss):














Foreign currency translation



(4,149)



1,609



(2,801)



(1,181)


Comprehensive income (loss)


$

232,693


$

(338,921)


$

193,076


$

(1,195,298)
















Basic income (loss) per common share:














Net income (loss) per share


$

0.01


$

(0.01)


$

0.01


$

(0.05)


Weighted average common shares outstanding



26,929,314



26,512,195



26,820,557



26,392,949
















Diluted income (loss) per common share:














Net income (loss) per share


$

0.01


$

(0.01)


$

0.01


$

(0.05)


Weighted average common shares outstanding



29,791,719



26,512,195



28,837,774



26,392,949


 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)











Nine Months Ended




March 31, 




2023


2022










Cash flow from operating activities:








Net income (loss)


$

195,877


$

(1,194,117)


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








Depreciation and amortization



30,486



12,144


Fair value of vested stock options



338,973



424,450


Fair value of vested restricted common stock



925,550



446,433


Fair value of vested unrestricted common stock



68,272



—


Changes in operating assets and liabilities:








Accounts receivable



(1,545,695)



(904,915)


Prepaid expenses and other current assets



(122,700)



(67,984)


Prepaid royalties



47,760



(54,287)


Accounts payable and accrued expenses



947,789



397,088


Deferred revenue



986,044



538,477


Net cash provided by (used in) operating activities



1,872,356



(402,711)










Cash flow from investing activities:








Purchase of property and equipment



(29,976)



(34,251)


Payment for non-refundable deposit for asset acquisition



(297,450)



—


Net cash used in investing activities



(327,426)



(34,251)










Cash flow from financing activities:








Proceeds from the exercise of stock options



57,500



97,688


Proceeds from the exercise of warrants



—



59,500


Common stock repurchase



(74,556)



(82,053)


Net cash provided by (used in) financing activities



(17,056)



75,135










Effect of exchange rate changes



1,850



(1,989)


Net increase (decrease) in cash and cash equivalents



1,529,724



(363,816)


Cash and cash equivalents, beginning of period



10,603,175



11,004,337


Cash and cash equivalents, end of period


$

12,132,899


$

10,640,521










Supplemental disclosures of cash flow information:








Cash paid for income taxes


$

5,543


$

6,592


 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/research-solutions-reports-fiscal-third-quarter-2023-results-301822739.html

SOURCE Research Solutions, Inc.


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