Research Solutions Reports Fiscal Second Quarter 2020 Financial Results
ENCINO, Calif., Feb. 13, 2020 /PRNewswire/ -- Research Solutions, Inc. (OTCQB: RSSS), a SaaS provider of workflow efficiency solutions for R&D-driven organizations, reported financial results for its fiscal second quarter 2020 ended December 31, 2019.
Fiscal Second Quarter 2020 Highlights vs. Year-Ago Quarter
-- Platform revenue up 42% to $950,000, with a 27% increase in total
Platform deployments to 338. Annual recurring revenue up 38% to $3.7
million.
-- Transaction revenue increased 4% to $6.6 million compared to $6.3
million, with customer count up to 1,139 compared to 1,083.
-- Total gross margin up 180 basis points to 30.2%.
-- Net loss from continuing operations was $0.6 million, or $(0.03) per
share, compared to a net loss of $0.6 million, or $(0.03) per share.
Management Commentary
"During the second quarter, we maintained our momentum with strong relative growth in both our Platform and Transaction businesses and continued consolidated gross margin expansion," said Peter Derycz, president and CEO of Research Solutions. "With our sales and marketing teams remaining heavily focused on generating new enterprise clients, we made good progress optimizing and fine-tuning our prospecting activities to ensure we are getting in front of the small-to-medium-sized organizations driven by R&D. In addition, we continued to make improvements to the Platform's user experience and interface, along with rolling out multiple updates to various gadgets throughout the quarter.
"As we look to the back half of fiscal 2020, we continue to expect our focus on the enterprise, along with introducing our unique capabilities to an expanded audience through various partnerships, to accelerate Platform revenue growth. Our ability to provide an innovative research platform that is consistently evolving to meet the needs of our customers combined with our retooled sales and marketing strategies gives us confidence that we will continue executing our growth strategy for the remainder of the year and beyond."
Fiscal Second Quarter 2020 Financial Results
Total revenue increased 8% to $7.5 million compared to $7.0 million in the same year-ago quarter.
Platform subscription revenue increased 42% to $950,000 compared to $668,000 in the same year-ago quarter. The increase was primarily due to a 27% increase in the total number of paid Platform deployments from 267 to 338 and upselling current platform customers. The quarter ended with annual recurring revenue up 38% to $3.7 million (see the company's definition of annual recurring revenue below).
Transaction revenue increased 4% to $6.6 million compared to $6.3 million in the same year-ago quarter. Total active customers increased 6% from 1,071 to 1,139 and transaction count increased 5% from 203,000 to 213,000 (see the company's definition of active customer accounts and transactions below).
Total gross margin increased 180 basis points to 30.2% from 28.4% in the same year-ago quarter. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were $3.0 million compared to $2.7 million in the same year-ago quarter. The increase was primarily due to continued investment in sales and marketing associated with expanding the Platform business.
Net loss from continuing operations was $0.6 million, or $(0.03) per share, compared to a net loss of $0.6 million, or $(0.03) per share, in the year-ago quarter. Adjusted EBITDA totaled $(184,000) compared to $(192,000) 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 December 31, 2019, amounted to $6.8 million compared to $5.4 million at 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.
Further details about these results are available in the company's quarterly report on Form 10-Q, 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, February 13, 2020
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: 10008494
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 March 5, 2020.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10008494
Fiscal Second Quarter 2020 Financial and Operational Summary Tables vs. Year-Ago Quarter
Quarter Ended December 31,
Six Months Ended December 31,
2019 2018
Change
% Change 2019 2018
Change
% Change
Revenue:
Platforms $949,825 $667,545 $282,280 42.3% $1,806,270 $1,256,558 $549,712 30.4%
Transactions 6,580,613 6,321,297 259,316 4.1% 13,319,281 12,684,805 634,476 4.8%
Total Revenue 7,530,438 6,988,842 541,596 7.7% 15,125,551 13,941,363 1,184,188 7.8%
Gross Profit:
Platforms 787,317 545,468 241,848 44.3% 1,493,292 1,026,222 467,070 31.3%
Transactions 1,486,483 1,442,771 43,712 3.0% 3,097,043 2,909,972 187,071 6.0%
Total Gross Profit 2,273,800 1,988,239 285,560 14.4% 4,590,335 3,936,194 654,141 14.3%
Gross profit as a % of revenue:
Platforms 82.9% 81.7% 1.2% 82.7% 81.7% 1.0%
Transactions 22.6% 22.8% -0.2% 23.3% 22.9% 0.3%
Total Gross Profit 30.2% 28.4% 1.7% 30.3% 28.2% 2.1%
Operating Expenses:
Sales and marketing 638,837 445,879 192,958 43.3% 1,189,186 877,296 311,890 26.2%
Technology and prod. dev. 548,719 553,272 (4,553) -0.8% 1,047,910 1,053,067 (5,157) -0.5%
General and administrative 1,270,375 1,180,599 89,776 7.6% 2,501,720 2,299,210 202,510 8.1%
Depreciation and amortization 6,840 9,733 (2,893) -29.7% 14,398 20,848 (6,450) -44.8%
Stock-based compensation 523,632 453,288 70,344 15.5% 666,304 569,197 97,107 14.6%
Foreign currency trans.loss (5,456) 10,025 (15,481) -154.4% 6,667 15,005 (8,338) 125.1%
Total Operating Expenses 2,982,947 2,652,796 330,151 12.4% 5,426,185 4,834,623 591,562 10.9%
Income (loss) from operations (709,147) (664,557) (44,590) -6.7% (835,850) (898,429) 62,579 7.5%
Other Income (Expenses):
Interest expense
Other income (expense) 26,527 23,764 2,763 11.6% 52,076 47,249 4,827 9.3%
Provision for income taxes (806) (7,442) 6,636 89.2% (7,300) (16,663) 9,363 128.3%
Gain on sale of disc'd ops. 91,254 55,698 35,556 63.8% 117,445 97,418 20,027 17.1%
Total Other Income (Expenses): 116,975 72,020 44,955 62.4% 162,221 128,004 34,217 21.1%
Net income (loss) $(592,172) $(592,537) 365 0.1% $(673,629) $(770,425) 96,796 14.4%
Adjusted EBITDA $(184,131) $(191,511) $7,380 3.9% $(148,481) $(293,379) $144,898 97.6%
Platforms:
ARR (Annual Recurring Rev.) $3,717,800 $2,702,137 $1,015,663 37.6% $3,717,800 $2,702,137 $1,015,663 37.6%
Deployments 338 267 71 26.6% 338 267 71 26.6%
ASP (Average Sales Price) $10,999 $10,120 $879 8.7% $10,999 $10,120 $879 8.7%
Transactions:
Transaction count 212,759 202,681 10,078 5.0% 428,539 404,893 23,646 5.8%
Corporate customers 856 838 18 2.1% 855 842 13 1.5%
Academic customers 283 245 38 15.5% 282 242 40 16.5%
Total customers 1,139 1,083 56 5.2% 1,137 1,084 53 4.8%
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 December 31, Six Months Ended December 31,
2019 2018
Change 2019 2018
Change
Net Income (loss) $(592,172) $(592,537) $365 $(673,629) $(770,425) $96,796
Add (deduct): -
Interest expense
Other income (expense) (26,527) (23,764) (2,763) (52,076) (47,249) (4,827)
Foreign currency translation loss (5,456) 10,025 (15,481) 6,667 15,005 (8,338)
Provision for income taxes 806 7,442 (6,636) 7,300 16,663 (9,363)
Depreciation and amortization 6,840 9,733 (2,893) 14,398 20,848 (6,450)
Stock-based compensation 523,632 453,288 70,344 666,304 569,197 97,107
Gain on sale of disc. ops. (91,254) (55,698) (35,556) (117,445) (97,418) (20,027)
Adjusted EBITDA $(184,131) $(191,511) $7,380 $(148,481) $(293,379) $144,898
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.
Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31
, June 30,
2019 2019
(unaudited)
Assets
Current assets:
Cash and cash equivalents $
6,769,128 $
5,353,090
Accounts receivable, net of allowance of $88,773 and
$100,175, respectively 4,150,780 4,493,169
Prepaid expenses and other current assets 315,774 323,591
Prepaid royalties 301,110
Total current assets 11,536,792 10,169,850
Other assets:
Property and equipment, net of accumulated depreciation
of $804,971 and $789,788, 22,629 36,828
respectively
Deposits and other assets 6,327 14,406
Right of use asset, net of accumulated amortization of
$330,109 and $270,777, respectively 132,913 192,245
Total assets $
11,698,661 $
10,413,329
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $
5,856,740 $
4,862,895
Deferred revenue 2,873,415 2,310,206
Lease liability, current portion 134,071 129,187
Total current liabilities 8,864,226 7,302,288
Long-term liabilities:
Lease liability, long-term portion 11,444 79,326
Total liabilities 8,875,670 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; 24,475,556 and 24,375,948 shares issued and
outstanding, respectively 24,476 24,376
Additional paid-in capital 24,098,311 23,631,481
Accumulated deficit (21,188,186) (20,514,557)
Accumulated other comprehensive loss (111,610) (109,585)
Total stockholders' equity 2,822,991 3,031,715
Total liabilities and stockholders' equity $
11,698,661 $
10,413,329
Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Other Comprehensive Loss
(Unaudited)
Three Months Ended
Six Months Ended
December 31
, December 31
,
2019 2018 2019 2018
Revenue:
Platforms $
949,825 $
667,545 $
1,806,270 $
1,256,558
Transactions 6,580,613 6,321,297 13,319,281 12,684,805
Total revenue 7,530,438 6,988,842 15,125,551 13,941,363
Cost of revenue:
Platforms 162,508 122,077 312,978 230,336
Transactions 5,094,130 4,878,526 10,222,238 9,774,833
Total cost of revenue 5,256,638 5,000,603 10,535,216 10,005,169
Gross profit 2,273,800 1,988,239 4,590,335 3,936,194
Operating expenses:
Selling, general and administrative 2,976,107 2,643,063 5,411,787 4,813,775
Depreciation and amortization 6,840 9,733 14,398 20,848
Total operating expenses 2,982,947 2,652,796 5,426,185 4,834,623
Loss from operations (709,147) (664,557) (835,850) (898,429)
Other income (expenses):
Interest expense
Other income 26,527 23,764 52,076 47,249
Total other income 26,527 23,764 52,076 47,249
Loss from operations before provision for
income taxes (682,620) (640,793) (783,774) (851,180)
Provision for income taxes (806) (7,442) (7,300) (16,663)
Loss from continuing operations (683,426) (648,235) (791,074) (867,843)
Gain from sale of discontinued operations 91,254 55,698 117,445 97,418
Net loss (592,172) (592,537) (673,629) (770,425)
Other comprehensive income (loss): 1,543 (1,668) (2,025) (6,038)
Foreign currency translation
Comprehensive loss $
(590,629) $
(594,205) $
(675,654) $
(776,463)
Loss per common share:
Loss per share from continuing operations,
basic and diluted $
(0.03) $
(0.03) $
(0.03) $
(0.04)
Income per share from discontinued operations,
basic and diluted
$
$
$ $
0.01
Net loss per share, basic and diluted $
(0.03) $
(0.03) $
(0.03) $
(0.03)
Weighted average common shares outstanding,
basic and diluted 24,185,966 23,787,836 24,140,616 23,716,312
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SOURCE Research Solutions, Inc.
