Research Solutions Reports Fiscal Fourth Quarter and Full Year 2020 Results
HENDERSON, Nev., Sept. 24, 2020 /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, 2020.
Fiscal Fourth Quarter 2020 Highlights
- Total revenue increased 5.5% to $7.9 million
- Platform revenue up 33% to $1.1 million, Annual recurring revenue up 38% to $4.4 million.
- Transaction revenue increased 2% to $6.8 million
- Total gross margin improved 200 basis points to 31.8%.
- Earnings of nil per share, unchanged from the prior-year quarter
- Adjusted EBITDA of $146,000, an improvement of $187,000
Full-Year Fiscal 2020 Highlights
- Total revenue increased 7.9% to $31.1 million
- Platform revenue of $3.9 million, a 38% increase, with a 33% increase in total Platform deployments to 401
- Transaction revenue increased 4.6% to $27.2 million, with customer count up to 1,119 compared to 1,081.
- Total gross margin increased 200 basis points to 31.0%
- Loss from continuing operations improved $395,000 to ($780,000), or ($0.03) per share, compared to ($0.05) per share in the prior year
- Adjusted EBITDA of $143,000, an improvement of $507,000
- Cash and cash equivalents increased to $9.3 million, up $4.0 million compared to prior year end
- Successfully uplisted to Nasdaq Capital Market
"Our fourth quarter and fiscal 2020 results reflect the continued momentum across our organization, including the uplisting of our stock to the NASDAQ market on March 23rd. We set another record for annual recurring revenue for our Platforms business thanks to another strong quarter of new deployments. The shift in our marketing approach towards enterprise campaigns contributed to the 100 net new Platform deployments for the full year, including 27 in the fourth quarter." said Peter Derycz, President and CEO of Research Solutions. "Our new partnerships and product initiatives expanded our available product offerings, while simplifying access for our customers, some of whom are involved in researching a potential COVID-19 vaccine. With additional product improvements, partnership opportunities on tap and better lead generation, combined with our strong balance sheet, we are well-positioned for continued progress in fiscal 2021."
Fiscal Fourth Quarter 2020 Results
Total revenue increased 5.5% to $7.9 million, compared to $7.5 million in the same year-ago quarter.
Platform subscription revenue increased 33% to approximately $1.1 million compared to $804,000 in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 27 added in the quarter. The quarter ended with annual recurring revenue of $4.4 million, up 7% sequentially and 38% year-over-year (see the company's definition of annual recurring revenue below).
Transaction revenue increased 2% to $6.8 million compared to $6.7 million in the fourth quarter of fiscal 2019. Transaction count increased 7.6% from the year-ago quarter to 231,000, with 1,087 transaction customers essentially unchanged from the fourth quarter of fiscal 2019 (see the company's definition of active customer accounts and transactions below).
Total gross margin improved 200 basis points from the prior-year quarter to 31.8%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were $2.5 million, compared to $2.4 million in the fourth quarter of 2019. The increase was primarily due to greater personnel costs.
Net loss in the fourth quarter was ($1,000), or nil per share, compared to a net loss of ($72,000), or nil per share, in the prior-year quarter. Adjusted EBITDA was $146,000, a $187,000 improvement from the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Full-Year Fiscal 2020 Results
Total revenue increased 7.9% to $31.1 million, compared to $28.8 million in fiscal 2019.
Platform subscription revenue was $3.9 million, a 38% 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 $27.2 million, a 4.6% increase compared to the previous year. The increase is primarily due to orders from new customers.
Total gross margin improved 210 basis points over the prior year to 31.0%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were $10.5 million compared to $9.6 million in the prior year. The increase was primarily due to greater personnel costs, higher advertising spend, professional service fees, and costs associated with the NASDAQ uplisting in March.
Net loss from continuing operations improved by $395,000 over the prior year to ($780,000). Net loss per share improved by $0.02 from fiscal 2019, to $(0.03) per share. Adjusted EBITDA was $143,000, compared to $(365,000) 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, 2020, amounted to $9.3 million compared to $5.4 million as of June 30, 2019. 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 CallResearch Solutions President and CEO Peter Derycz and CFO Alan Urban will host the conference call, followed by a question and answer period.
Date: Thursday, September 24, 2020Time: 5:00 p.m. ET (2:00 p.m. PT)Toll-free dial-in number: 1-855-327-6837International dial-in number: 1-631-891-4304Conference ID: 10011047
The conference call will be broadcast live and available for replay until October 15, 2020, by dialing 1-844-512-2921 and using the replay ID 10011047, 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, | |||||
2020 | 2019 | Change | % Change | ||
Revenue: | |||||
Platforms | $ 1,066,630 | $ 803,917 | $ 262,713 | 32.7% | |
Transactions | 6,819,150 | 6,670,685 | 148,465 | 2.2% | |
Total Revenue | 7,885,780 | 7,474,602 | 411,178 | 5.5% | |
Gross Profit: | |||||
Platforms | 913,389 | 661,549 | 251,841 | 38.1% | |
Transactions | 1,595,144 | 1,566,056 | 29,088 | 1.9% | |
Total Gross Profit | 2,508,533 | 2,227,605 | 280,929 | 12.6% | |
Gross profit as a % of revenue: | |||||
Platforms | 85.6% | 82.3% | 3.3% | ||
Transactions | 23.4% | 23.5% | -0.1% | ||
Total Gross Profit | 31.8% | 29.8% | 2.0% | ||
Operating Expenses: | |||||
Sales and marketing | 692,096 | 659,108 | 32,988 | 5.0% | |
Technology and product development | 537,830 | 549,198 | (11,368) | -2.1% | |
General and administrative | 1,132,483 | 1,060,268 | 72,215 | 6.8% | |
Depreciation and amortization | 3,746 | 8,351 | (4,605) | -55.1% | |
Stock-based compensation | 143,054 | 126,903 | 16,151 | 12.7% | |
Foreign currency translation loss | 4,214 | 7,193 | (2,979) | -41.4% | |
Total Operating Expenses | 2,513,423 | 2,411,021 | 102,402 | 4.2% | |
Income (loss) from operations | (4,890) | (183,416) | 178,527 | 97.3% | |
Other Income (Expenses): | |||||
Interest expense | - | - | - | ||
Other income (expense) | 4,306 | 32,184 | (27,878) | -86.6% | |
Provision for income taxes | 25 | (4,895) | 4,920 | 100.5% | |
Gain on sale of disc'd operations | - | 84,275 | (84,275) | -100.0% | |
Total Other Income (Expenses): | 4,331 | 111,564 | (107,233) | -96.1% | |
Net income (loss) | $ (559) | $ (71,852) | 71,294 | 99.2% | |
Adjusted EBITDA | $ 146,124 | $ (40,969) | $ 187,094 | 456.7% | |
Quarter Ended June 30, | |||||
2020 | 2019 | Change | % Change | ||
Platforms: | |||||
ARR (Annual recurring revenue): | |||||
Beginning of Period | $ 4,149,830 | $ 2,987,647 | $ 1,162,183 | 38.9% | |
Incremental ARR | 296,258 | 237,025 | 59,233 | 25.0% | |
End of Period | $ 4,446,088 | $ 3,224,672 | $ 1,221,416 | 37.9% | |
Deployments: | |||||
Beginning of Period | 374 | 281 | 93 | 33.1% | |
Incremental Deployments | 27 | 20 | 7 | 35.0% | |
End of Period | 401 | 301 | 100 | 33.2% | |
ASP (Average sales price): | |||||
Beginning of Period | $ 11,096 | $ 10,632 | $ 464 | 4.4% | |
End of Period | $ 11,088 | $ 10,713 | $ 374 | 3.5% | |
Transactions: | |||||
Transaction count | 230,916 | 214,686 | 16,230 | 7.6% | |
Corporate customers | 808 | 832 | (24) | -2.9% | |
Academic customers | 279 | 258 | 21 | 8.1% | |
Total customers | 1,087 | 1,090 | (3) | -0.3% | |
Fiscal Full Year Financial and Operational Summary Tables vs. Prior-Year
Year Ended June 30, | ||||||
2020 | 2019 | Change | % Change | |||
Revenue: | ||||||
Platforms | $ 3,890,689 | $ 2,809,201 | $ 1,081,488 | 38.5% | ||
Transactions | 27,168,048 | 25,984,721 | 1,183,327 | 4.6% | ||
Total Revenue | 31,058,737 | 28,793,922 | 2,264,815 | 7.9% | ||
Gross Profit: | ||||||
Platforms | 3,246,551 | 2,301,826 | 944,725 | 41.0% | ||
Transactions | 6,391,331 | 6,041,635 | 349,696 | 5.8% | ||
Total Gross Profit | 9,637,882 | 8,343,461 | 1,294,421 | 15.5% | ||
Gross profit as a % of revenue: | ||||||
Platforms | 83.4% | 81.9% | 1.5% | |||
Transactions | 23.5% | 23.3% | 0.3% | |||
Total Gross Profit | 31.0% | 29.0% | 2.1% | |||
Operating Expenses: | ||||||
Sales and marketing | 2,508,238 | 2,079,045 | 429,193 | 20.6% | ||
Technology and product development | 2,121,978 | 2,139,950 | (17,972) | -0.8% | ||
General and administrative | 4,864,783 | 4,488,940 | 375,843 | 8.4% | ||
Depreciation and amortization | 23,654 | 38,816 | (15,162) | -39.1% | ||
Stock-based compensation | 951,595 | 827,172 | 124,423 | 15.0% | ||
Foreign currency translation loss | 19,529 | 24,500 | (4,971) | -20.3% | ||
Total Operating Expenses | 10,489,777 | 9,598,423 | 891,354 | 9.3% | ||
Income (loss) from operations | (851,895) | (1,254,962) | 403,068 | 32.1% | ||
Other Income (Expenses): | ||||||
Interest expense | - | - | - | |||
Other income (expense) | 80,044 | 107,308 | (27,264) | -25.4% | ||
Provision for income taxes | (7,836) | (27,040) | 19,204 | 71.0% | ||
Gain on sale of disc'd operations | 117,445 | 214,737 | (97,292) | -45.3% | ||
Total Other Income (Expenses): | 189,653 | 295,005 | (105,352) | -35.7% | ||
Net income (loss) | $ (662,242) | $ (959,957) | 297,716 | 31.0% | ||
Adjusted EBITDA | $ 142,883 | $ (364,474) | $ 507,358 | 139.2% | ||
Year Ended June 30, | ||||||
2020 | 2019 | Change | % Change | |||
Platforms: | ||||||
ARR (Annual recurring revenue): | ||||||
Beginning of Period | $ 3,224,672 | $ 2,252,956 | $ 971,716 | 43.1% | ||
Incremental ARR | 1,221,416 | 971,716 | 249,700 | 25.7% | ||
End of Period | $ 4,446,088 | $ 3,224,672 | $ 1,221,416 | 37.9% | ||
Deployments: | ||||||
Beginning of Period | 301 | 227 | 74 | 32.6% | ||
Incremental Deployments | 100 | 74 | 26 | 35.1% | ||
End of Period | 401 | 301 | 100 | 33.2% | ||
ASP (Average sales price): | ||||||
Beginning of Period | $ 10,713 | $ 9,925 | $ 788 | 7.9% | ||
End of Period | $ 11,088 | $ 10,713 | $ 374 | 3.5% | ||
Transactions: | ||||||
Transaction count | 887,561 | 831,099 | 56,462 | 6.8% | ||
Corporate customers | 841 | 835 | 6 | 0.7% | ||
Academic customers | 278 | 246 | 32 | 13.0% | ||
Total customers | 1,119 | 1,081 | 38 | 3.5% | ||
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 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, | Year Ended June 30, | ||||||||||
2020 | 2019 | Change | % Change | 2020 | 2019 | Change | % Change | ||||
Net Income (loss) | $ (559) | $ (71,852) | $ 71,294 | 99.2% | $(662,242) | $(959,957) | $ 297,716 | 31.0% | |||
Add (deduct): | |||||||||||
Other income (expense) | (4,306) | (32,184) | 27,878 | 86.6% | (80,044) | (107,308) | 27,264 | 25.4% | |||
Foreign currency translation loss | 4,214 | 7,193 | (2,979) | -41.4% | 19,529 | 24,500 | (4,971) | -20.3% | |||
Provision for income taxes | (25) | 4,895 | (4,920) | -100.5% | 7,836 | 27,040 | (19,204) | -71.0% | |||
Depreciation and amortization | 3,746 | 8,351 | (4,605) | -55.1% | 23,654 | 38,816 | (15,162) | -39.1% | |||
Stock-based compensation | 143,054 | 126,903 | 16,151 | 12.7% | 951,595 | 827,172 | 124,423 | 15.0% | |||
Gain on sale of disc. ops. | - | (84,275) | 84,275 | 100.0% | (117,445) | (214,737) | 97,292 | 45.3% | |||
Adjusted EBITDA | $ 146,124 | $ (40,969) | $ 187,094 | 456.7% | $ 142,883 | $(364,474) | $ 507,358 | 139.2% | |||
About Research Solutions and Reprints DeskResearch Solutions, Inc. (NASDAQ: RSSS) is a pioneer in providing seamless access and simplifies how organizations and individual researchers discover, acquire, and manage scholarly journal articles, book chapters and other content in scientific, technical, and medical (STM) research. More than 70 percent of the top pharmaceutical companies, prestigious universities, and emerging businesses rely on Article Galaxy, a cloud-based SaaS research platform, for simplified and lowest cost access to the latest scientific research and data. Featuring an ecosystem of app-like Gadgets for a personalized research experience, Article Galaxy offers individual as well as enterprise plans, coupled with unparalleled, 24/7 customer support. For more information and details, please visit www.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 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 SubsidiariesConsolidated Balance Sheets | ||||||
June 30, | June 30, | |||||
2020 | 2019 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 9,311,556 | $ | 5,353,090 | ||
Accounts receivable, net of allowance of $88,485 and $100,175, respectively | 4,449,260 | 4,493,169 | ||||
Prepaid expenses and other current assets | 241,747 | 323,591 | ||||
Prepaid royalties | 720,367 | - | ||||
Total current assets | 14,722,930 | 10,169,850 | ||||
Other assets: | ||||||
Property and equipment, net of accumulated depreciation of $804,999 and $789,788, respectively | 11,276 | 36,828 | ||||
Deposits and other assets | 6,155 | 14,406 | ||||
Right of use asset, net of accumulated amortization of $390,691 and $270,777, respectively | 72,331 | 192,245 | ||||
Total assets | $ | 14,812,692 | $ | 10,413,329 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | $ | 6,349,845 | $ | 4,862,895 | ||
Deferred revenue | 3,524,507 | 2,310,206 | ||||
Lease liability, current portion | 79,326 | 129,187 | ||||
Total current liabilities | 9,953,678 | 7,302,288 | ||||
Long-term liabilities: | ||||||
Lease liability, long-term portion | - | 79,326 | ||||
Total liabilities | 9,953,678 | 7,381,614 | ||||
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; 26,032,263 and 24,375,948 shares issued and outstanding, respectively | 26,032 | 24,376 | ||||
Additional paid-in capital | 26,134,819 | 23,631,481 | ||||
Accumulated deficit | (21,176,799) | (20,514,557) | ||||
Accumulated other comprehensive loss | (125,038) | (109,585) | ||||
Total stockholders' equity | 4,859,014 | 3,031,715 | ||||
Total liabilities and stockholders' equity | $ | 14,812,692 | $ | 10,413,329 | ||
Research Solutions, Inc. and SubsidiariesConsolidated Statements of Operations and Other Comprehensive Loss | ||||||
Years Ended | ||||||
June 30, | ||||||
2020 | 2019 | |||||
Revenue: | ||||||
Platforms | $ | 3,890,689 | $ | 2,809,201 | ||
Transactions | 27,168,048 | 25,984,721 | ||||
Total revenue | 31,058,737 | 28,793,922 | ||||
Cost of revenue: | ||||||
Platforms | 644,138 | 507,375 | ||||
Transactions | 20,776,717 | 19,943,086 | ||||
Total cost of revenue | 21,420,855 | 20,450,461 | ||||
Gross profit | 9,637,882 | 8,343,461 | ||||
Operating expenses: | ||||||
Selling, general and administrative | 10,466,123 | 9,559,608 | ||||
Depreciation and amortization | 23,654 | 38,816 | ||||
Total operating expenses | 10,489,777 | 9,598,424 | ||||
Loss from operations | (851,895) | (1,254,963) | ||||
Other income | 80,044 | 107,308 | ||||
Loss from operations before provision for income taxes | (771,851) | (1,147,655) | ||||
Provision for income taxes | (7,836) | (27,040) | ||||
Loss from continuing operations | (779,687) | (1,174,695) | ||||
Gain from sale of discontinued operations | 117,445 | 214,737 | ||||
Net loss | (662,242) | (959,958) | ||||
Other comprehensive loss: Foreign currency translation | (15,453) | (14,878) | ||||
Comprehensive loss | $ | (677,695) | $ | (974,836) | ||
Loss per common share: | ||||||
Loss per share from continuing operations, basic and diluted | $ | (0.03) | $ | (0.05) | ||
Income per share from discontinued operations, basic and diluted | $ | - | $ | 0.01 | ||
Net loss per share, basic and diluted | $ | (0.03) | $ | (0.04) | ||
Weighted average common shares outstanding, basic and diluted | 24,760,790 | 23,815,761 | ||||
Research Solutions, Inc. and SubsidiariesConsolidated Statements of Cash Flows | ||||||||||||||||
Years Ended | ||||||||||||||||
June 30, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net loss | $ | (662,242) | $ | (959,958) | ||||||||||||
Gain from sale of discontinued operations | (117,445) | (214,737) | ||||||||||||||
Loss from continuing operations | (779,687) | (1,174,695) | ||||||||||||||
Adjustment to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 23,654 | 38,816 | ||||||||||||||
Amortization of lease right | 119,914 | 115,079 | ||||||||||||||
Fair value of vested stock options | 610,634 | 523,978 | ||||||||||||||
Fair value of vested restricted common stock | 340,961 | 303,194 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 43,909 | (241,918) | ||||||||||||||
Prepaid expenses and other current assets | 199,289 | 218,033 | ||||||||||||||
Prepaid royalties | (720,367) | 93,336 | ||||||||||||||
Deposits and other assets | 8,094 | - | ||||||||||||||
Accounts payable and accrued expenses | 1,486,950 | 175,949 | ||||||||||||||
Deferred revenue | 1,214,301 | 644,460 | ||||||||||||||
Lease liability | (129,187) | (119,786) | ||||||||||||||
Net cash provided by operating activities | 2,418,465 | 576,446 | ||||||||||||||
Cash flow from investing activities: | ||||||||||||||||
Purchase of property and equipment | - | (15,828) | ||||||||||||||
Net cash used in investing activities | - | (15,828) | ||||||||||||||
Cash flow from financing activities: | ||||||||||||||||
Common stock repurchase and retirement | (321,601) | (200,023) | ||||||||||||||
Proceeds from the exercise of stock options | 1,875,000 | 100,000 | ||||||||||||||
Net cash provided by (used in) financing activities | 1,553,399 | (100,023) | ||||||||||||||
Effect of exchange rate changes | (13,398) | (15,685) | ||||||||||||||
Net increase in cash and cash equivalents | 3,958,466 | 444,910 | ||||||||||||||
Cash and cash equivalents, beginning of period | 5,353,090 | 4,908,180 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 9,311,556 | $ | 5,353,090 | ||||||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||
Cash paid for income taxes | $ | 7,836 | $ | 27,040 | ||||||||||||
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SOURCE Research Solutions, Inc.