Research Solutions Reports Fourth Quarter and Fiscal Year 2024 Results
Reports 18% Revenue Increase, ARR of $17.4 Million and Record Cash Flow
HENDERSON, Nev., Sept. 19, 2024 /PRNewswire/ -- Research Solutions, Inc. (NASDAQ: RSSS), a trusted partner providing cloud-based workflow solutions to accelerate research for R&D-driven organizations, reported record financial results for its fourth quarter and full fiscal year ended June 30, 2024.
Fiscal Fourth Quarter 2024 Summary (compared to prior-year quarter)
-- Total revenue of $12.1 million, a 22% increase.
-- Platform revenue up 86% to $4.3 million. Platform revenue accounted for
35% of the revenue as compared to 23% in the prior year.
-- Annual Recurring Revenue ("ARR") up 84% to $17.4 million, which includes
approximately $12.1 million of B2B recurring revenue and $5.4M of B2C
recurring revenue.
-- Gross profit up 44%. Total gross margin improved 710 basis points to
46.5%.
-- Net loss of $2.8 million, or ($0.09) per diluted share, compared to
$376,000 or $0.01 per diluted share. The quarter's result includes a
charge of approximately $4.3 million related to increasing the projected
earnout for Scite.
-- Adjusted EBITDA of $1.4 million, a 70% improvement and a Company
quarterly record, compared to $825,000.
-- Cash flow from operations of $2.0 million, compared to $1.5 million, a
30% improvement.
Fiscal Year 2024 Summary (compared to Fiscal 2023)
-- Total revenue of $44.6 million, an 18% increase.
-- Platform revenue up 61% to $14.0 million. Transaction revenue increased
5.7% to $30.7 million.
-- Gross profit up 34%. Total gross margin improved 500 basis points to
44.0%.
-- Net loss of $3.8 million, or ($0.13) per diluted share, including the
previously mentioned $4.3 million charge and $1.5 million in proxy and
acquisition-related expenses, compared to net income of $572,000 or
$0.02 per diluted share.
-- Adjusted EBITDA of $2.2 million, which is inclusive of proxy and
acquisition-related expenses of $1.4 million, a Company record, compared
to $2.0 million.
-- Cash flow from operations of $3.6 million, a Company record, compared to
$3.4 million.
"Fiscal 2024 was a transformational year for the Company. We completed two acquisitions which helped position us as a vertical SaaS and AI company, helping researchers throughout their entire workflow. The integration of these acquisitions and our operational execution were meaningful contributors to our 85% year-over-year ARR growth and the double-digit increase in Adjusted EBITDA," said Roy W. Olivier, President and CEO of Research Solutions. "There are many untapped market opportunities where our highly specialized product offerings can serve as a vital piece of the research process. Overall, we believe we are well-positioned to deliver meaningful ARR growth while expanding Adjusted EBITDA margins, creating long-term value for our shareholders."
Fiscal Fourth Quarter 2024 Results
Total revenue was $12.1 million, a 22% increase from $10.0 million in the year-ago quarter primarily driven by increased platform revenue versus the prior-year period due to revenue from the Company's acquisitions as well as organic platform revenue growth.
Platform subscription revenue for the quarter was $4.3 million, an 86% year-over-year increase. The increase was primarily due to the acquisition of Scite, as well as organic growth in the core Article Galaxy platform. The quarter ended with annual recurring revenue of $17.4 million, up 84% year-over-year (see the company's definition of annual recurring revenue below).
Transaction revenue was $7.9 million, compared to $7.7 million in the fourth quarter of fiscal 2023. The transaction active customer count for the quarter was 1,398, compared to 1,404 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).
Total gross margin improved 710 basis points from the prior-year quarter to 46.5%. The increase was primarily driven by the continued revenue mix shift to the higher-margin Platforms business, as well as a 70 basis point increase in margins in the transactions business.
Total operating expenses were $5.0 million, compared to $3.7 million in the fourth quarter of 2023. The increase was primarily related to the additional cost base associated with the aforementioned acquisitions, as well as increased non-cash depreciation and amortization expense related to such acquisitions.
Other expense for the quarter was approximately $3.5 million, compared to other income of $120,000 in the prior-year quarter. The primary driver of this was $4.3M of expense related to increasing the earn-out assumption associated with the Scite acquisition.
Net loss in the fourth quarter was $2.8 million, or ($0.09) per diluted share, compared to net income of $376,000, or $0.01 per diluted share, in the prior-year quarter. Adjusted EBITDA was $1.4 million, compared to $825,000 in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Full-Year Fiscal 2024 Results
Total revenue was $44.6 million, an 18% increase from fiscal 2023, driven by both increased platform revenue and transaction revenue.
Platform subscription revenue for fiscal 2024 was $14.0 million, a 61% year-over-year increase. The increase was primarily due to the acquisition of Scite, as well as organic growth in the core Article Galaxy platform.
Transaction revenue was $30.7 million, compared to $29.0 million in fiscal 2023. The increase was driven by organic growth and the impact of a full year of contribution from the acquisition of contracts from FIZ Karlsruhe, compared to six months in fiscal 2023.
Total gross margin improved 500 basis points from the prior-year to 44.0%. The increase was primarily driven by the continued revenue mix shift to the higher-margin Platforms business, as well as a 100 basis point increase in margins in the transactions business related to pricing initiatives.
Total operating expenses for the year were $20.4 million, compared to $14.5 million in fiscal 2023. The increase was primarily related to the additional cost base associated with the acquisitions, including increased non-cash depreciation and amortization expense related to such acquisitions, as well as the aforementioned proxy and acquisition-related expenses.
Net loss for fiscal 2024 was $3.8 million, or ($0.13) per diluted share, compared to net income of $572,000, or $0.02 per diluted share, in the prior-year. Adjusted EBITDA was $2.2 million, compared to $2.0 million in fiscal 2023 (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, September 19, 2024
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-412-317-5180
The conference call will be broadcast live and available for replay until October 19, 2024 by dialing 1-412-317-6671 and using the replay ID 10191850, 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,
Twelve Months Ended June 30,
2024 2023 Change % Change 2024 2023 Change % Change
Revenue:
Platforms $4,277,338 $2,303,375 $1,973,963 85.7 % $13,956,517 $8,683,246 $5,273,271 60.7 %
Transactions $7,856,176 $7,656,342 199,834 2.6 % $30,667,382 $29,020,206 1,647,176 5.7 %
Total Revenue 12,133,514 9,959,717 2,173,797 21.8 % 44,623,899 37,703,452 6,920,447 18.4 %
Gross Profit:
Platforms 3,650,286 2,028,265 1,622,021 80.0 % 11,889,314 7,655,960 4,233,353 55.3 %
Transactions 1,992,580 1,892,278 100,302 5.3 % 7,750,852 7,044,931 705,921 10.0 %
Total Gross Profit 5,642,866 3,920,543 1,722,323 43.9 % 19,640,166 14,700,891 4,939,274 33.6 %
Gross profit as a % of revenue:
Platforms 85.3 % 88.1 % -2.7 % 85.2 % 88.2 % -3.0 %
Transactions 25.4 % 24.7 % 0.6 % 25.3 % 24.3 % 1.0 %
Total Gross Profit 46.5 % 39.4 % 7.1 % 44.0 % 39.0 % 5.0 %
Operating Expenses:
Sales and marketing 830,195 455,030 375,165 82.4 % 3,442,503 2,285,478 1,157,025 50.6 %
Technology and product development 1,489,491 991,093 498,398 50.3 % 5,442,382 3,742,192 1,700,190 45.4 %
General and administrative 1,917,907 1,649,333 268,574 16.3 % 8,511,697 6,654,012 1,857,685 27.9 %
Depreciation and amortization 311,004 22,163 288,841 1303.3 % 836,271 52,649 783,622 1488.4 %
Stock-based compensation 426,190 585,384 (159,194) -27.2 % 2,155,461 1,849,906 305,555 16.5 %
Foreign currency translation loss 6,336 (37,743) 44,079 116.8 % 21,395 (121,953) 143,348 117.5 %
Total Operating Expenses 4,981,123 3,665,260 1,315,863 35.9 % 20,409,709 14,462,284 5,947,425 41.1 %
Income (loss) from operations 661,743 255,283 406,460 159.2 % (769,543) 238,608 (1,008,151) -422.5 %
Other Income (Expenses):
Other income (3,451,948) 120,522 (3,572,470) NM (2,903,983) 338,617 (3,242,600) NM
Provision for income taxes (31,022) (59) (30,963) NM (113,071) (5,602) (107,469) NM
Total Other Income (Expenses): (3,482,970) 120,463 (3,603,433) NM (3,017,054) 333,015 (3,350,069) NM
Net income (loss) $(2,821,227) $375,746 (3,196,973) NM $(3,786,597) $571,623 (4,358,220) NM
NM
Adjusted EBITDA $1,405,273 $825,087 $580,186 70.3 % $2,243,584 $2,019,210 $224,374 11.1 %
Quarter Ended June 30,
Twelve Months Ended June 30,
2024 2023 Change % Change 2024 2023 Change % Change
Platforms:
B2B ARR (Annual recurring
revenue*):
Beginning of Period $11,653,063 $9,107,681 $2,545,382 27.9 % $9,444,130 $7,922,188 $1,521,942 19.2 %
Incremental ARR 407,139 336,448 70,691 21.0 % 2,616,072 1,521,941 1,094,131 71.9 %
End of Period $12,060,202 $9,444,129 $2,616,073 27.7 % $12,060,202 $9,444,129 $2,616,073 27.7 %
Deployments:
Beginning of Period 983 815 168 20.6 % 835 733 102 13.9 %
Incremental Deployments 38 20 18 90.0 % 186 102 84 82.4 %
End of Period 1,021 835 186 22.3 % 1,021 835 186 22.3 %
ASP (Average sales price):
Beginning of Period $11,855 $11,175 $680 6.1 % $11,310 $10,808 $502 4.6 %
End of Period $11,812 $11,310 $502 4.4 % $11,812 $11,310 $502 4.4 %
B2C ARR (Annual recurring
revenue*):
Beginning of Period $4,902,975
$ - $4,902,975
$ -
$ -
$ -
Incremental ARR 460,154 460,154 NM 5,363,129 5,363,129 NM
End of Period $5,363,129
$ - $5,363,129 NM $5,363,129
$ - $5,363,129 NM
Total ARR (Annualized recurring
revenue): $17,423,331 $9,444,129 $7,979,202 84.5 % $17,423,331 $9,444,129 $7,979,202 84.5 %
Transaction Customers:
Corporate customers 1,093 1,090 3 0.3 % 1,088 1,012 76 7.5 %
Academic customers 305 314 (9) -2.9 % 316 304 12 4.0 %
Total customers 1,398 1,404 (6) -0.4 % 1,404 1,316 88 6.7 %
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. For B2C ARR, this includes the annualized value of monthly subscriptions, meaning their monthly value multiplied by twelve.
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) including any change in fair value of contingent earnout liability, 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, Twelve Months Ended June 30,
2024 2023 Change % Change 2024 2023 Change % Change
Net Income (loss) $(2,821,227) $375,746 $(3,196,973) NM $(3,786,597) $571,623 $(4,358,220) NM
Add (deduct):
Other income (expense) 3,451,948 (120,522) 3,572,470 NM 2,903,983 (338,617) 3,242,600 NM
Foreign currency
translation loss 6,336 (37,743) 44,079 116.8 % 21,395 (121,953) 143,348 117.5 %
Provision for income taxes 31,022 59 30,963 NM 113,071 5,602 107,469 NM
Depreciation and
amortization 311,004 22,163 288,841 1303.3 % 836,271 52,649 783,622 1488.4 %
Stock-based compensation 426,190 585,384 (159,194) -27.2 % 2,155,461 1,849,906 305,555 16.5 %
Gain on sale of disc. ops.
Adjusted EBITDA $1,405,273 $825,087 $580,186 70.3 % $2,243,584 $2,019,210 $224,374 11.1 %
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 enhanced product offerings, additional customers, 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.
Research Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, June 30,
2024 2023
Assets
Current assets:
Cash and cash equivalents $
6,100,031 $
13,545,333
Accounts receivable, net of allowance of $68,579 and $85,015, respectively 6,879,800 6,153,063
Prepaid expenses and other current assets 643,553 400,340
Prepaid royalties 1,067,237 1,202,678
Total current assets 14,690,621 21,301,414
Non-current assets:
Property and equipment, net of accumulated depreciation of $922,558 and $881,908, 88,011 70,193
respectively
Intangible assets, net of accumulated amortization of $1,535,310 and $747,355, 10,764,261 462,068
respectively ($8,343,056 provisional)
Goodwill ($13,171,486 provisional) 16,315,888
Deposits and other assets 981 1,052
Total assets $
41,859,762 $
21,834,727
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $
8,843,612 $
8,079,516
Deferred revenue 9,023,848 6,424,724
Total current liabilities 17,867,460 14,504,240
Non-current liabilities:
Contingent earnout liability 12,298,114
Total liabilities 30,165,574 14,504,240
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; 32,295,373 and 32,295 29,487
29,487,508 shares issued and outstanding, respectively
Additional paid-in capital 38,089,958 29,941,873
Accumulated deficit (26,309,246) (22,522,649)
Accumulated other comprehensive loss (118,819) (118,224)
Total stockholders' equity 11,694,188 7,330,487
Total liabilities and stockholders' equity $
41,859,762 $
21,834,727
Research Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations and Other Comprehensive Loss
Years Ended
June 30,
2024 2023
Revenue:
Platforms $
13,956,517 $
8,683,246
Transactions 30,667,382 29,020,206
Total revenue 44,623,899 37,703,452
Cost of revenue:
Platforms 2,067,203 1,027,286
Transactions 22,916,530 21,975,275
Total cost of revenue 24,983,733 23,002,561
Gross profit 19,640,166 14,700,891
Operating expenses:
Selling, general and administrative 19,573,438 14,409,634
Depreciation and amortization 836,271 52,649
Total operating expenses 20,409,709 14,462,283
Income (loss) from operations (769,543) 238,608
Other income 333,088 338,617
Change in fair value of contingent earnout liability (3,237,071)
Income (loss) from operations before provision for income taxes (3,673,526) 577,225
Provision for income taxes (113,071) (5,602)
Net income (loss) (3,786,597) 571,623
Other comprehensive income (loss):
Foreign currency translation (595) 3,717
Comprehensive income (loss) $
(3,787,192) $
575,340
Basic income (loss) per common share:
Net income (loss) per share $
(0.13) $
0.02
Weighted average common shares outstanding 28,863,949 26,860,761
Diluted income (loss) per common share:
Net income (loss) per share $
(0.13) $
0.02
Weighted average common shares outstanding 28,863,949 29,139,759
Research Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended
June 30,
2024 2023
Cash flow from operating activities:
Net income (loss) $
(3,786,597) $
571,623
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 836,271 52,649
Fair value of vested stock options 140,150 375,189
Fair value of vested restricted common stock 1,994,362 1,418,718
Fair value of vested unrestricted common stock 68,272
Modification cost of accelerated vesting of restricted common stock 20,949 56,000
Adjustment to contingent earnout liability 3,237,071
Changes in operating assets and liabilities:
Accounts receivable (344,020) (901,518)
Prepaid expenses and other current assets (164,579) (124,314)
Prepaid royalties 135,441 (356,026)
Accounts payable and accrued expenses 560,027 1,337,056
Deferred revenue 921,879 886,198
Net cash provided by operating activities 3,550,954 3,383,847
Cash flow from investing activities:
Purchase of property and equipment (71,510) (47,209)
Payment for acquisition of Resolute, net of cash acquired (2,718,253)
Payment for acquisition of Scite, net of cash acquired (7,305,493)
Payment for non-refundable deposit for asset acquisition (297,450)
Net cash used in investing activities (10,095,256) (344,659)
Cash flow from financing activities:
Proceeds from the exercise of stock options 57,500
Common stock repurchase (554,202) (104,250)
Payment of contingent acquisition consideration (351,649) (50,509)
Net cash used in financing activities (905,851) (97,259)
Effect of exchange rate changes 4,851 229
Net increase (decrease) in cash and cash equivalents (7,445,302) 2,942,158
Cash and cash equivalents, beginning of period 13,545,333 10,603,175
Cash and cash equivalents, end of period $
6,100,031 $
13,545,333
Supplemental disclosures of cash flow information:
Cash paid for income taxes $
113,071 $
5,602
Non-cash investing and financing activities:
Contingent consideration accrual on asset acquisition $
32,022 $
138,428
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SOURCE Research Solutions, Inc.
