Research Solutions Reports Fiscal First Quarter 2023 Results

Reports 12% Total Revenue Growth, Positive EPS, and 33 Percent Increase in ARR to $8.3 Million

HENDERSON, Nev., Nov. 10, 2022 /PRNewswire/ -- Research Solutions, Inc. (NASDAQ: RSSS), a pioneer in providing cloud-based workflow solutions for R&D driven organizations, today reported financial results for its fiscal first quarter ended September 30, 2022.

Fiscal First Quarter 2023 Summary

• Total revenue of $8.7 million, a 12% increase from the prior-year quarter
• Platform revenue up 34% to $2.0 million. Annual Recurring Revenue ("ARR") up 33% to $8.3 million
• Gross profit up 26% from prior-year quarter. Total gross margin improved 420 basis points to 38.6%
• Net income of $215,000,or $0.01 per diluted share, compared to loss of ($372,000) or ($0.01) per share
• Adjusted EBITDA of $433,000, a quarterly record for the Company.  Positive cash flow from operations of $109,000
• Platform incremental ARR generated in the quarter was $0.4M, and a total of over $2 million in the past twelve months

"It is exciting to see the impacts on our top and bottom line as our Platforms segment continues to grow and become a larger component of our business," said Roy W. Olivier, President and CEO of Research Solutions. "We are also encouraged by the performance of our Transactions segment, which grew almost 7% in the quarter. This does not reflect the recently announced opportunity regarding onboarding FIZ Karlsruhe's AutoDoc customers which will also provide new upsell leads for our Article Galaxy Platform.  We also continue to evaluate additional M&A opportunities to increase our recurring revenues and generate additional profitability in the future."

Fiscal First Quarter 2023 Results

Total revenue was $8.7 million, a 12% increase from $7.7 million in the year-ago quarter as both platform and transaction revenue increased versus the prior-year period.

Platform subscription revenue increased 34% to $2.0 million compared to approximately $1.5 million in the year-ago quarter. The increase was due to increases in ARR associated with customer upsells and increases in the total number of paid Platform deployments, including 23 net deployments added in the quarter. The quarter ended with annual recurring revenue of $8.3 million, up 33% year-over-year (see the company's definition of annual recurring revenue below).

Transaction revenue was $6.7 million, compared to $6.2 million in the first quarter of fiscal 2022. This represents the first increase in transaction revenue since the second quarter of fiscal 2022 and the largest percentage increase since the second quarter of fiscal 2018. Transaction customer count for the quarter was 1,220, compared to 1,153 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).

Total gross margin improved 420 basis points from the prior-year quarter to 38.6%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business as well as lower operating costs associated with the Platform business.   

Total operating expenses were $3.2 million, compared to $3.0 million in the first quarter of fiscal 2022 and $3.7 million in the fourth quarter of fiscal 2022. The sequential decrease was primarily due to lower technology and product development costs and approximately $275,000 in in severance expenses related to the company's repositioning for fiscal 2023.

Net income in the first quarter was $215,000, or $0.01 per diluted share, compared to net loss of ($372,000), or ($0.01) per share, in the prior-year quarter. Adjusted EBITDA was $433,000, compared to ($181,000) 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, November 10, 2022Time: 5:00 p.m. ET (2:00 p.m. PT)Dial-in number: 1-631-891-4304Conference ID: 10020201

The conference call will be broadcast live and available for replay until December 10, 2022 by dialing 1-412-317-6671 and using the replay ID 10020201, 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

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):

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. 

View original content to download multimedia:https://www.prnewswire.com/news-releases/research-solutions-reports-fiscal-first-quarter-2023-results-301674990.html

SOURCE Research Solutions, Inc.