Research Solutions Reports Fiscal First Quarter 2021 Results
HENDERSON, Nev., Nov. 12, 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 2021 first quarter ended September 30, 2020.
Fiscal First Quarter 2021 Summary Compared to Prior Year Quarter:
-- Total revenue increased 2% to $7.7 million
-- Platform revenue up 33% to $1.1 million, Annual recurring revenue up 35%
to $4.7 million
-- Total gross margin improved 110 basis points to 31.6%
-- Net income of $15,000, an improvement of $96,000; diluted earnings per
share of nil
-- Adjusted EBITDA of $167,000, an improvement of $131,000
"The sustained momentum within our Platforms business is evident in our first quarter fiscal 2021 results, with 31 net new deployments in the quarter and a record for Annual Recurring Revenue," said Peter Derycz, President and CEO of Research Solutions. "We continue to enhance the product initiatives and offerings through Article Galaxy research platform to simplify, accelerate and lower the cost of information access for our users, including many within the life sciences field that continue to work on therapeutics and vaccines for COVID-19. We believe we remain well-positioned to grow our business through ongoing product improvements to our Article Galaxy platform, additional partnership opportunities, such as our most recent partnership with BIO Business Solutions, and our refined lead generation and sales approach."
Fiscal First Quarter 2021 Results
Total revenue increased 2% to $7.7 million, compared to $7.6 million in the same year-ago quarter.
Platform subscription revenue increased 33% to approximately $1.1 million compared to $856,000 in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 31 net deployments added in the quarter. The quarter ended with annual recurring revenue of $4.7 million, up 7% sequentially and 35% year-over-year (see the company's definition of annual recurring revenue below).
Transaction revenue decreased 2% to $6.6 million compared to $6.7 million in the prior-year quarter. Transaction count increased 4.3% from the year-ago quarter to 225,000, with 1,090 transaction customers, compared to 1,134 customers in the first quarter of fiscal year 2020 (see the company's definition of active customer accounts and transactions below).
Total gross margin improved 110 basis points from the prior-year quarter to 31.6%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were $2.4 million, essentially unchanged from the year-ago quarter.
Net income in the first quarter was $15,000, or nil per diluted share, compared to a net loss of ($81,000), or nil per share, in the prior-year quarter. Adjusted EBITDA was $167,000, a $132,000 improvement from the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Cash and cash equivalents on September 30, 2020, amounted to $10.2 million compared to $9.3 million as of June 30, 2020. 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 Call
Research Solutions President and CEO Peter Derycz and CFO Alan Urban will host the conference call, followed by a question and answer period.
Date: Thursday, November 12, 2020
Time: 5:00 p.m. ET (2:00 p.m. PT)
Toll-free dial-in number: 1-855-327-6837
International dial-in number: 1-631-891-4304
Conference ID: 10011712
The conference call will be broadcast live and available for replay until December 3, 2020, by dialing 1-844-512-2921 and using the replay ID 10011712, 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
Quarter Ended September 30,
2020 2019 Change % Change
Revenue:
Platforms $1,141,688 $856,445 $285,243 33.3%
Transactions 6,606,737 6,738,668 (131,931) -2.0%
Total Revenue 7,748,425 7,595,113 153,312 2.0%
Gross Profit:
Platforms 937,736 705,975 231,760 32.8%
Transactions 1,511,840 1,610,560 (98,720) -6.1%
Total Gross Profit 2,449,576 2,316,535 133,040 5.7%
Gross profit as a % of revenue:
Platforms 82.1% 82.4% -0.3%
Transactions 22.9% 23.9% -1.0%
Total Gross Profit 31.6% 30.5% 1.1%
Operating Expenses:
Sales and marketing 498,374 550,349 (51,975) -9.4%
Technology and product development 622,961 499,191 123,770 24.8%
General and administrative 1,161,061 1,231,345 (70,284) -5.7%
Depreciation and amortization 3,723 7,558 (3,835) -50.7%
Stock-based compensation 170,790 142,672 28,118 19.7%
Foreign currency translation loss (24,249) 12,123 (36,372) -300.0%
Total Operating Expenses 2,432,660 2,443,238 (10,578) -0.4%
Income (loss) from operations 16,915 (126,703) 143,618 113.4%
Other Income (Expenses):
Interest expense
Other income (expense) 235 25,549 (25,314) -99.1%
Provision for income taxes (2,505) (6,494) 3,989 61.4%
Gain on sale of disc'd operations 26,191 (26,191) -100.0%
Total Other Income (Expenses): (2,270) 45,246 (47,516) -105.0%
Net income (loss) $14,645 $(81,457) 96,102 118.0%
Adjusted EBITDA $167,179 $35,650 $131,529 368.9%
Quarter Ended September 30,
2020 2019 Change % Change
Platforms:
ARR (Annual recurring revenue):
Beginning of Period $4,446,088 $3,224,672 $1,221,416 37.9%
Incremental ARR 295,095 273,697 21,398 7.8%
End of Period $4,741,183 $3,498,369 $1,242,814 35.5%
Deployments:
Beginning of Period 401 301 100 33.2%
Incremental Deployments 31 19 12 63.2%
End of Period 432 320 112 35.0%
ASP (Average sales price):
Beginning of Period $11,088 $10,713 $374 3.5%
End of Period $10,975 $10,932 $43 0.4%
Transactions:
Transaction count 225,086 215,780 9,306 4.3%
Corporate customers 805 853 (48) -5.6%
Academic customers 285 281 4 1.4%
Total customers 1,090 1,134 (44) -3.9%
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 September 30,
2020 2019 Change % Change
Net Income (loss) $14,645 $(81,457) $96,102 118.0%
Add (deduct):
Other income (expense) (235) (25,549) 25,314 99.1%
Foreign currency translation loss (24,249) 12,123 (36,372) -300.0%
Provision for income taxes 2,505 6,494 (3,989) -61.4%
Depreciation and amortization 3,723 7,558 (3,835) -50.7%
Stock-based compensation 170,790 142,672 28,118 19.7%
Gain on sale of disc. ops. (26,191) 26,191 100.0%
Adjusted EBITDA $167,179 $35,650 $131,529 -368.9%
About Research Solutions and Reprints Desk
Research 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 Subsidiaries
Condensed Consolidated Balance Sheets
September 30
, June 30,
2020 2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents $
10,187,333 $
9,311,556
Accounts receivable, net of allowance of $88,102 and $88,485, respectively 4,455,091 4,449,260
Prepaid expenses and other current assets 240,381 241,747
Prepaid royalties 1,042,558 720,367
Total current assets 15,925,363 14,722,930
Other assets:
Property and equipment, net of accumulated depreciation of $810,349 and $804,999, 12,091 11,276
respectively
Deposits and other assets 6,183 6,155
Right of use asset, net of accumulated amortization of $421,469 and $390,691, 41,553 72,331
respectively
Total assets $
15,985,190 $
14,812,692
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $
7,382,741 $
6,349,845
Deferred revenue 3,555,579 3,524,507
Lease liability, current portion 45,550 79,326
Total current liabilities 10,983,870 9,953,678
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; 26,190,713 and 26,032,263 26,191 26,032
shares issued and outstanding, respectively
Additional paid-in capital 26,261,156 26,134,819
Accumulated deficit (21,162,154) (21,176,799)
Accumulated other comprehensive loss (123,873) (125,038)
Total stockholders' equity 5,001,320 4,859,014
Total liabilities and stockholders' equity $
15,985,190 $
14,812,692
Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)
Three Months Ended
September 30
,
2020 2019
Revenue:
Platforms $
1,141,688 $
856,445
Transactions 6,606,737 6,738,668
Total revenue 7,748,425 7,595,113
Cost of revenue:
Platforms 203,952 150,470
Transactions 5,094,897 5,128,108
Total cost of revenue 5,298,849 5,278,578
Gross profit 2,449,576 2,316,535
Operating expenses:
Selling, general and administrative 2,428,938 2,435,680
Depreciation and amortization 3,723 7,558
Total operating expenses 2,432,661 2,443,238
Income (loss) from operations 16,915 (126,703)
Other income 235 25,549
Income (loss) from operations before provision for income taxes 17,150 (101,154)
Provision for income taxes (2,505) (6,494)
Income (loss) from continuing operations 14,645 (107,648)
Gain from sale of discontinued operations 26,191
Net income (loss) 14,645 (81,457)
Other comprehensive income (loss): 1,165 (3,568)
Foreign currency translation
Comprehensive income (loss) $
15,810 $
(85,025)
Basic income (loss) per common share:
Income (loss) per share from continuing operations
$
$
Income per share from discontinued operations
$
$
Net income (loss) per share
$
$
Basic weighted average common shares outstanding 25,898,900 24,095,266
Diluted income (loss) per common share:
Income (loss) per share from continuing operations
$
$
Income per share from discontinued operations
$
$
Net income (loss) per share
$
$
Basic weighted average common shares outstanding 26,511,180 24,095,266
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SOURCE Research Solutions, Inc.
