Research Solutions Reports Fiscal Fourth Quarter and Full Year 2019 Financial Results
ENCINO, Calif., Sept. 19, 2019 /PRNewswire/ -- Research Solutions, Inc. (OTCQB: RSSS), a SaaS provider of workflow efficiency solutions for R&D-driven organizations, reported financial results for its fiscal fourth quarter and full year ended June 30, 2019.
Fiscal Fourth Quarter 2019 Highlights vs. Year-Ago Quarter
-- Platform revenue up 52% to $804,000, with a 33% increase in total
Platform deployments to 301. Annual recurring revenue up 43% to $3.2
million.
-- Transaction revenue increased to $6.7 million compared to $6.6 million,
with customer count up to 1,090 compared to 1,081.
-- Total gross margin up 260 basis points to 29.8%.
-- Net loss from continuing operations was $0.2 million, or nil per share,
compared to a net loss of $0.1 million, or $(0.01) per share.
Management Commentary
"Fiscal 2019 was another step forward as we continued to grow our SaaS-based Platform business, provide exceptional value through our innovative research tools, and test various sales and marketing strategies," said Peter Derycz, president and CEO of Research Solutions. "In fact, during the fourth quarter our Platform revenue grew 52% over the year-ago quarter and we continued to maintain a customer churn rate far better than the industry standard, which speaks volumes to the value our Platform provides. We remain committed to driving new user growth and are currently optimizing our marketing strategies to further align with this strategy.
"Each day we get smarter about the ways in which to expand our Platform customer base. We have launched various digital marketing campaigns specifically targeting organizations that we know can significantly benefit from our enterprise offering, and we continue to measure the effectiveness of each campaign and strive for lower costs and better efficiency. We are also intensely focused on nurturing leads through better follow-up practices, which we believe will improve conversion rates.
"As we move into fiscal 2020, we are shifting our marketing efforts to focus on business-to-business campaigns, rather than individual customer campaigns. While individual customers provide a great starting point for enterprise leads, we believe a more focused and direct outreach to potential enterprise customers will be more efficient and accelerate revenue growth. We will also continue to focus on upgrading and enhancing our Platform to ensure we are consistently providing the most innovative and valuable research tools for our customers."
Fiscal Fourth Quarter 2019 Financial Results
Total revenue increased 4% to $7.5 million compared to $7.2 million in the same year-ago quarter.
Platform subscription revenue increased 52% to $804,000 compared to $529,000 in the same year-ago quarter. The increase was due to upselling current platform customers and to a 33% increase in the total number of paid Platform deployments from 227 to 301. The quarter ended with annual recurring revenue up 43% to $3.2 million (see the company's definition of annual recurring revenue below).
Transaction revenue increased slightly to $6.7 million compared to $6.6 million in the same year-ago quarter. Total active customers also increased slightly from 1,081 to 1,090 as well as transaction count from 213,000 to 215,000 (see the company's definition of active customer accounts and transactions below).
Total gross margin increased 260 basis points to 29.8% from 27.2% in the same year-ago quarter. The increase was primarily driven by a 150 basis point increase in Platform gross margin and the continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were $2.4 million compared to $2.1 million in the same year-ago quarter. The increase was primarily due to greater spending on sales and marketing related to expanding the Platform business.
Net loss from continuing operations was $0.2 million, or nil per share, compared to a net loss of $0.1 million, or $(0.01) per share, in the year-ago quarter. Adjusted EBITDA totaled $(41,000) compared to $(27,000) in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Cash and cash equivalents at June 30, 2019, amounted to $5.4 million compared to $4.9 million at June 30, 2018. There were no outstanding borrowings under the company's $2.5 million revolving line of credit. Apart from a $0.1 million office lease liability due to new accounting guidance for leases, the company had no long-term liabilities or other debt.
Full Year 2019 Financial Results
Total revenue increased 3% to $28.8 million compared to $28.0 million in 2018.
Platform subscription revenue increased 54% to $2.8 million compared to $1.8 million in 2018. The increase was due to the previously mentioned increase in total paid Platform deployments to 301 and strong growth in annual recurring revenue to $3.2 million.
Transaction revenue was $26.0 million compared to $26.2 million in 2018. Total active customers increased 3% from 1,052 to 1,081, and transaction count was 831,000 compared to 843,000.
Total gross margin increased 280 basis points to 29.0% from 26.2% in 2018. The increase was driven by the continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were $9.6 million compared to $9.3 million in 2018. The increase was primarily driven by the company's continued investment in technology and product development.
Net loss from continuing operations in fiscal 2019 improved to $1.2 million, or $(0.05) per share, compared to a net loss of $1.9 million, or $(0.08) per share, in 2018. Adjusted EBITDA improved to $(0.4) million compared to $(1.0) million in 2018.
Further details about these results are available in the company's annual report on Form 10-K, which is available in the investor relations section of the company's website at www.researchsolutions.com.
Conference Call
Research Solutions President and CEO Peter Derycz and CFO Alan Urban will host an investor conference call to discuss these results and the company's outlook, followed by a question and answer period.
Date: Thursday, September 19, 2019
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-855-327-6837
International dial-in number: 1-631-891-4304
Conference ID: 10007580
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.
The conference call will be broadcast live and available for replay here and via the investor relations section of the company's website at www.researchsolutions.com.
A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through October 3, 2019.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10007580
Fiscal Fourth Quarter and Full Year 2019 Financial and Operational Summary Tables vs. Year-Ago Quarter
Quarter Ended June 30,
Year Ended June 30,
2019 2018
Change
% Change 2019 2018
Change
% Change
Revenue:
Platforms $803,917 $528,581 $275,336 52.1% $2,809,201 $1,819,149 $990,052 54.4%
Transactions 6,670,685 6,637,292 33,393 0.5% 25,984,721 26,199,292 (214,571) -0.8%
Total Revenue 7,474,602 7,165,873 308,729 4.3% 28,793,922 28,018,441 775,481 2.8%
Gross Profit:
Platforms 661,549 427,211 234,338 54.9% 2,301,826 1,440,245 861,581 59.8%
Transactions 1,566,056 1,518,441 47,615 3.1% 6,041,635 5,909,080 132,555 2.2%
Total Gross Profit 2,227,605 1,945,652 281,953 14.5% 8,343,461 7,349,325 994,136 13.5%
Gross profit as a % of revenue:
Platforms 82.3% 80.8% 1.5% 81.9% 79.2% 2.8%
Transactions 23.5% 22.9% 0.6% 23.3% 22.6% 0.7%
Total Gross Profit 29.8% 27.2% 2.7% 29.0% 26.2% 2.7%
Operating Expenses:
Sales and marketing 659,108 455,250 203,858 44.8% 2,079,045 2,181,693 (102,648) -4.7%
Technology and product development 549,198 454,053 95,145 21.0% 2,139,950 1,798,048 341,902 19.0%
General and administrative 1,060,268 1,062,980 (2,712) -0.3% 4,488,940 4,385,107 103,833 2.4%
Depreciation and amortization 8,351 32,731 (24,380) -74.5% 38,816 152,397 (113,581) -74.5%
Stock-based compensation 126,903 75,089 51,814 69.0% 827,172 790,236 36,936 4.7%
Foreign currency translation loss 7,193 14,589 (7,396) -50.7% 24,500 (8,020) 32,520 405.5%
Total Operating Expenses 2,411,021 2,094,692 316,329 15.1% 9,598,423 9,299,461 298,962 3.2%
Income (loss) from operations (183,416) (149,040) (34,376) -23.1% (1,254,962) (1,950,136) 695,174 35.6%
Other Income (Expenses):
Interest expense (4,000) 4,000 100.0%
Other income (expense) 32,184 20,296 11,888 58.6% 107,308 58,179 49,129 84.4%
Provision for income taxes (4,895) (7,681) 2,786 36.3% (27,040) (39,779) 12,739 32.0%
Gain on sale of disc'd operations 84,275 51,216 33,059 64.5% 214,737 256,995 (42,258) -16.4%
Total Other Income (Expenses): 111,564 63,831 47,733 74.8% 295,005 271,395 23,610 8.7%
Net income (loss) $(71,852) $(85,209) 13,357 15.7% $(959,957) $(1,678,741) 718,784 42.8%
Adjusted EBITDA $(40,969) $(26,631) $(14,338) -53.8% $(364,474) $(1,015,523) $651,049 64.1%
Platforms:
ARR (Annual recurring revenue) $3,224,672 $2,252,956 $971,716 43.1% $3,224,672 $2,252,956 $971,716 43.1%
Deployments 301 227 74 32.6% 301 227 74 32.6%
ASP (Average sales price) $10,713 $9,925 $788 7.9% $10,713 $9,925 $788 7.9%
Transactions:
Transaction count 214,686 231,247 (16,561) -7.2% 831,099 842,939 (11,840) -1.4%
Corporate customers 832 851 (19) -2.2% 835 830 5 0.6%
Academic customers 258 230 28 12.2% 246 222 24 10.8%
Total customers 1,090 1,081 9 0.8% 1,081 1,052 29 2.8%
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,
2019 2018
Change 2019 2018
Change
Net Income (loss) $(71,852) $(85,209) $13,357 $(959,957) $(1,678,741) $718,784
Add (deduct): -
Interest expense 4,000 (4,000)
Other income (expense) (32,184) (20,296) (11,888) (107,308) (58,179) (49,129)
Foreign currency translation loss 7,193 14,589 (7,396) 24,500 (8,020) 32,520
Provision for income taxes 4,895 7,681 (2,786) 27,040 39,779 (12,739)
Depreciation and amortization 8,351 32,731 (24,380) 38,816 152,397 (113,581)
Stock-based compensation 126,903 75,089 51,814 827,172 790,236 36,936
Gain on sale of discontinued operations (84,275) (51,216) (33,059) (214,737) (256,995) 42,258
Adjusted EBITDA $(40,969) $(26,631) $(14,338) $(364,474) $(1,015,523) $651,049
About Research Solutions
Research Solutions, Inc. (OTCQB: RSSS) provides workflow efficiency solutions for R&D-driven organizations in life sciences, technology and academia worldwide. Our Software-as-a-Service platform provides tools or "Gadgets" that allow users to discover, access, manage and collaborate around science, technology and medical (STM) content and data. Our customers range from 70 percent of the top 25 global pharmaceutical companies to emerging small and medium-sized businesses. We generate recurring revenue from subscriptions to our SaaS platform and transactional revenue from the sale of STM content. For more information, 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. 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.
Investor Relations:
Gateway Investor Relations
Cody Slach
Tel 1-949-574-3860
RSSS@gatewayir.com
Media Contact:
Research Solutions, Inc.
Mitja Alexander Linss
Tel 1-617-763-2312
mlinss@reprintsdesk.com
Research Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30
, June 30,
2019 2018
Assets
Current assets:
Cash and cash equivalents $
5,353,090 $
4,908,180
Accounts receivable, net of allowance of $100,175 and
$115,040, respectively 4,493,169 4,251,251
Prepaid expenses and other current assets 323,591 326,887
Prepaid royalties 93,336
Total current assets 10,169,850 9,579,654
Other assets:
Property and equipment, net of accumulated depreciation
of $789,788 and $749,923, respectively 36,828 59,043
Deposits and other assets 14,406 14,372
Right of use asset, net of accumulated amortization of
$270,777 and $155,698, respectively 192,245 307,324
Total assets $
10,413,329 $
9,960,393
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $
4,862,895 $
4,686,946
Deferred revenue 2,310,206 1,665,746
Lease liability, current portion 129,187 119,786
Total current liabilities 7,302,288 6,472,478
Long-term liabilities:
Lease liability, long-term portion 79,326 208,513
Total liabilities 7,381,614 6,680,991
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; 24,375,948 and 24,016,999 shares issued and
outstanding, respectively 24,376 24,017
Additional paid-in capital 23,631,481 22,904,691
Accumulated deficit (20,514,557) (19,554,599)
Accumulated other comprehensive loss (109,585) (94,707)
Total stockholders' equity 3,031,715 3,279,402
Total liabilities and stockholders' equity $
10,413,329 $
9,960,393
Research Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations and Other Comprehensive Loss
Years Ended
June 30
,
2019 2018
Revenue:
Platforms $
2,809,201 $
1,819,149
Transactions 25,984,721 26,199,292
Total revenue 28,793,922 28,018,441
Cost of revenue:
Platforms 507,375 378,904
Transactions 19,943,086 20,290,212
Total cost of revenue 20,450,461 20,669,116
Gross profit 8,343,461 7,349,325
Operating expenses:
Selling, general and administrative 9,559,608 9,147,064
Depreciation and amortization 38,816 152,397
Total operating expenses 9,598,424 9,299,461
Loss from operations (1,254,963) (1,950,136)
Other income (expenses):
Interest expense (4,000)
Other income 107,308 58,179
Total other income 107,308 54,179
Loss from operations before provision for
income taxes (1,147,655) (1,895,957)
Provision for income taxes (27,040) (39,779)
Loss from continuing operations (1,174,695) (1,935,736)
Gain from sale of discontinued operations 214,737 256,995
Net loss (959,958) (1,678,741)
Other comprehensive loss
Foreign currency translation (14,878) (23,978)
Comprehensive loss $
(974,836) $
(1,702,719)
Loss per common share:
Loss per share from continuing operations,
basic and diluted $
(0.05) $
(0.08)
Income per share from discontinued operations,
basic and diluted $
0.01 $
0.01
Net loss per share, basic and diluted $
(0.04) $
(0.07)
Weighted average common shares outstanding,
basic and diluted 23,815,761 23,473,105
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SOURCE Research Solutions, Inc.
