Research Solutions Reports Fiscal Third Quarter 2025 Results
Reports 23 Percent Increase in ARR to $20.4 Million and 43 Net New Platform Deployments, Positive Net Income and Record Adjusted EBITDA and Cashflow
HENDERSON, Nev., May 8, 2025 /PRNewswire/ -- Research Solutions, Inc. (NASDAQ: RSSS), the leading AI-powered research workflow platform, reported financial results for its fiscal third quarter ended March 31, 2025.
Fiscal Third Quarter 2025 Summary
-- Total revenue of $12.7 million, compared to $12.1 million in the
prior-year quarter.
-- Platform revenue up 22% to $4.8 million. Platform revenue accounted for
38% of total revenue as compared to 33% in the prior-year quarter.
-- Annual Recurring Revenue ("ARR") up 23% to $20.4 million, which includes
approximately $13.5 million of B2B recurring revenue and $6.9 million of
B2C recurring revenue. Net B2B ARR growth in the quarter was $736,000,
a Company record for quarterly B2B growth.
-- Gross profit up 14% from the prior-year quarter. Total gross margin
improved 430 basis points to 49.5%.
-- Net income of $216,000 or $0.01 per diluted share, compared to net
income of $76,000 or nil per diluted share in the prior-year quarter.
-- Adjusted EBITDA of $1.4 million compared to $961,000 in the prior-year
quarter. On a trailing twelve-months ("TTM") basis, the Company has now
generated Adjusted EBITDA of $5.1 million, which represents a 10.4%
margin.
-- Cash flow from operations of approximately $2.9 million in the quarter,
which was a Company quarterly record, compared to $2.0 million in the
prior-year quarter.
"This quarter represents a number of significant milestone achievements for our Company. We are pleased to report ARR above $20 million for the first time in our history. Revenue from our AI-based B2B offerings has grown over 180% in the last year, and we continue to experience strong growth in our B2C offerings and core Article Galaxy platform. These results are due in part to our revamped sales strategy, which better demonstrates to potential customers the improved efficiency and cost savings offered by our products within the research process workflow," said Roy W. Olivier, President and CEO of Research Solutions. "As we experience strong organic growth in ARR sales, we continue to outperform when it comes to generating operating cash flow and Adjusted EBITDA, which positions us to reinvest in our business or make acquisitions that broaden our product capabilities and enhance our cross-selling opportunities."
Fiscal Third Quarter 2025 Results
Total revenue was $12.7 million, a 4.5% increase from $12.1 million in the year-ago quarter as platform revenue growth more than offset a decline in transaction revenue from the prior period.
Platform subscription revenue increased 22% to $4.8 million compared to $4.0 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments and B2C subscribers, as well as upsells to existing customers. The quarter ended with annual recurring revenue of $20.4 million, up 23% year-over-year (see the Company's definition of annual recurring revenue below).
Transaction revenue was $7.8 million, compared to $8.2 million in the third quarter of fiscal 2024. The decrease was primarily due to lower paid order volume in the period. The transaction customer count for the quarter was 1,380, compared to 1,426 customers in the prior-year quarter (see the Company's definition of active customer accounts and transactions below).
Total gross margin improved 430 basis points from the prior-year quarter to 49.5%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platforms business as well as increased margins in that business and the transaction business.
Total operating expenses were $5.7 million, compared to $5.4 million in the third quarter of 2024. The increases were related to additional costs in Sales and Marketing, offset by some reductions in General and Administrative expenses.
Net income for the third quarter was $216,000, or $0.01 per diluted share, compared to net income of $76,000, or nil per diluted share, in the prior-year quarter. Adjusted EBITDA was $1.4 million, compared to $961,000 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, May 8, 2025
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-203-518-9843
Conference ID: RESEARCH
The conference call will be broadcast live and available for replay until June 8, 2025 by dialing 1-412-317-6671 and using the replay ID 11158769, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.
Fiscal Third Quarter Financial and Operational Summary Tables vs. Prior-Year Quarter
Quarter Ended March 31,
Nine Months Ended March 31,
2025 2024 Change % Change 2025 2024 Change % Change
Revenue:
Platforms $4,839,929 $3,953,403 $886,526 22.4 % $13,770,831 $9,679,179 $4,091,652 42.3 %
Transactions $7,821,434 $8,162,269 (340,835) -4.2 % $22,849,233 $22,811,206 38,027 0.2 %
Total Revenue 12,661,363 12,115,672 545,691 4.5 % 36,620,064 32,490,385 4,129,679 12.7 %
Gross Profit:
Platforms 4,229,623 3,382,051 847,572 25.1 % 11,993,516 8,239,028 3,754,488 45.6 %
Transactions 2,037,457 2,099,881 (62,424) -3.0 % 5,860,533 5,758,272 102,261 1.8 %
Total Gross Profit 6,267,080 5,481,932 785,148 14.3 % 17,854,049 13,997,300 3,856,749 27.6 %
Gross profit as a % of revenue:
Platforms 87.4 % 85.5 % 1.8 % 87.1 % 85.1 % 2.0 %
Transactions 26.0 % 25.7 % 0.3 % 25.6 % 25.2 % 0.4 %
Total Gross Profit 49.5 % 45.2 % 4.3 % 48.8 % 43.1 % 5.7 %
Operating Expenses:
Sales and marketing 1,607,678 1,122,365 485,313 43.2 % 4,141,172 2,612,308 1,528,864 58.5 %
Technology and product development 1,394,936 1,371,754 23,182 1.7 % 4,274,543 3,952,891 321,652 8.1 %
General and administrative 1,845,411 2,027,074 (181,663) -9.0 % 5,783,788 6,593,791 (810,002) -12.3 %
Depreciation and amortization 312,013 309,898 2,115 0.7 % 930,341 525,267 405,074 77.1 %
Stock-based compensation 594,639 541,002 53,637 9.9 % 1,546,950 1,729,271 (182,321) -10.5 %
Foreign currency translation loss (44,519) 22,177 (66,696) NM (119,205) 15,059 (134,264) NM
Total Operating Expenses 5,710,158 5,394,270 315,888 5.9 % 16,557,589 15,428,587 1,129,003 7.3 %
Income (loss) from operations 556,922 87,663 469,259 535.3 % 1,296,460 (1,431,286) 2,727,746 NM
Other Income (Expenses):
Other income (327,042) 31,228 (358,270) NM (2,316,404) 547,965 (2,864,369) NM
Provision for income taxes (13,410) (42,590) 29,180 -68.5 % (74,816) (82,049) 7,233 -8.8 %
Total Other Income (Expenses): (340,452) (11,362) (329,090) NM (2,391,220) 465,916 (2,857,136) NM
Net income (loss) $216,470 $76,301 140,169 183.7 % $(1,094,760) $(965,370) (129,390) -13.4 %
NM
Adjusted EBITDA $1,419,055 $960,740 $458,315 47.7 % $3,654,546 $838,311 $2,816,235 335.9 %
Quarter Ended March 31,
Nine Months Ended March 31,
2025 2024 Change % Change 2025 2024 Change % Change
Platforms:
B2B ARR (Annual recurring
revenue*):
Beginning of Period $12,738,256 $11,614,748 $1,123,508 9.7 % $12,060,201 $9,444,130 $2,616,071 27.7 %
Incremental ARR 735,818 38,315 697,503 1820.4 % 1,413,873 2,208,933 (795,060) -36.0 %
End of Period $13,474,074 $11,653,063 $1,821,011 15.6 % $13,474,074 $11,653,063 $1,821,012 15.6 %
Deployments:
Beginning of Period 1,090 942 148 15.7 % 1,021 835 186 22.3 %
Incremental Deployments 43 41 2 4.9 % 112 148 (36) -24.3 %
End of Period 1,133 983 150 15.3 % 1,133 983 150 15.3 %
ASP (Average sales price):
Beginning of Period $11,686 $12,330 $(643) -5.2 % $11,812 $11,310 $502 4.4 %
End of Period $11,892 $11,855 $38 0.3 % $11,892 $11,855 $38 0.3 %
B2C ARR (Annual recurring
revenue*):
Beginning of Period $6,371,381 $3,954,090 $2,417,291 61.1 % $5,363,129
$ - $5,363,129 NM
Incremental ARR 506,545 948,885 (442,340) NM 1,514,797 4,902,975 (3,388,178) NM
End of Period $6,877,926 $4,902,975 $1,974,951 40.3 % $6,877,926 $4,902,975 $1,974,951 40.3 %
Total ARR (Annualized recurring
revenue): $20,352,000 $16,556,038 $3,795,962 22.9 % $20,352,000 $16,556,038 $3,795,963 22.9 %
Transaction Customers:
Corporate customers 1,060 1,105 (45) -4.1 % 1,062 1,087 (25) -2.3 %
Academic customers 320 321 (1) -0.3 % 323 320 3 1.0 %
Total customers 1,380 1,426 (46) -3.2 % 1,385 1,407 (22) -1.5 %
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, and other potential adjustments that may arise. Set forth below is a reconciliation of Adjusted EBITDA to net income (loss):
Quarter Ended March 31,
Nine Months Ended March 31,
2025 2024 Change % Change 2025 2024 Change % Change
Net Income (loss) $216,470 $76,301 $140,169 183.7 % $(1,094,760) $(965,370) $(129,390) -13.4 %
Add (deduct):
Other (income) expense 327,042 (31,228) 358,270 NM 2,316,404 (547,965) 2,864,369 NM
Foreign currency translation loss (gain) (44,519) 22,177 (66,696) NM (119,205) 15,059 (134,264) NM
Provision for income taxes 13,410 42,590 (29,180) -68.5 % 74,816 82,049 (7,233) -8.8 %
Depreciation and amortization 312,013 309,898 2,115 0.7 % 930,341 525,267 405,074 77.1 %
Stock-based compensation 594,639 541,002 53,637 9.9 % 1,546,950 1,729,271 (182,321) -10.5 %
Adjusted EBITDA $1,419,055 $960,740 $458,315 47.7 % $3,654,546 $838,311 $2,816,235 335.9 %
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
Condensed Consolidated Balance Sheets (Unaudited)
March 31, June 30,
2025 2024
Assets
Current assets:
Cash and cash equivalents $
9,852,007 $
6,100,031
Accounts receivable, net of allowance of $82,026 and $68,579, respectively 7,604,058 6,879,800
Prepaid expenses and other current assets 625,727 643,553
Prepaid royalties 755,299 1,067,237
Total current assets 18,837,091 14,690,621
Non-current assets:
Property and equipment, net of accumulated depreciation of $944,694 and $922,558, respectively 60,051 88,011
Intangible assets, net of accumulated amortization of $2,431,738 and $1,535,310, respectively 9,956,378 10,764,261
Goodwill 16,372,979 16,315,888
Deposits and other assets 881 981
Total assets $
45,227,380 $
41,859,762
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $
8,529,572 $
8,843,612
Deferred revenue 10,355,768 9,023,848
Contingent earnout liability, current portion 6,019,488
Total current liabilities 24,904,828 17,867,460
Non-current liabilities:
Contingent earnout liability, long-term portion 9,091,422 12,298,114
Total liabilities 33,996,250 30,165,574
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; 32,405,120 and 32,295,373 shares 32,405 32,295
issued and outstanding, respectively
Additional paid-in capital 38,728,405 38,089,958
Accumulated deficit (27,404,006) (26,309,246)
Accumulated other comprehensive loss (125,674) (118,819)
Total stockholders' equity 11,231,130 11,694,188
Total liabilities and stockholders' equity $
45,227,380 $
41,859,762
Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2025 2024 2025 2024
Revenue:
Platforms $
4,839,929 $
3,953,403 $
13,770,831 $
9,679,179
Transactions 7,821,434 8,162,269 22,849,233 22,811,206
Total revenue 12,661,363 12,115,672 36,620,064 32,490,385
Cost of revenue:
Platforms 610,306 571,352 1,777,315 1,440,151
Transactions 5,783,977 6,062,388 16,988,700 17,052,934
Total cost of revenue 6,394,283 6,633,740 18,766,015 18,493,085
Gross profit 6,267,080 5,481,932 17,854,049 13,997,300
Operating expenses:
Selling, general and administrative 5,398,145 5,084,371 15,627,248 14,903,319
Depreciation and amortization 312,013 309,898 930,341 525,267
Total operating expenses 5,710,158 5,394,269 16,557,589 15,428,586
Income (loss) from operations 556,922 87,663 1,296,460 (1,431,286)
Other income 78,868 31,228 496,392 279,678
Change in fair value of contingent earnout liability (405,910) (2,812,796) 268,287
Income (loss) before provision for income taxes 229,880 118,891 (1,019,944) (883,321)
Provision for income taxes (13,410) (42,590) (74,816) (82,049)
Net income (loss) 216,470 76,301 (1,094,760) (965,370)
Other comprehensive income (loss):
Foreign currency translation (3,324) 858 (6,855) 6,261
Comprehensive income (loss) $
213,146 $
77,159 $
(1,101,615) $
(959,109)
Basic income (loss) per common share:
Net income (loss) per share $
0.01
$ $
(0.04) $
(0.03)
Weighted average common shares outstanding 31,033,022 30,020,652 30,597,410 28,377,199
Diluted income (loss) per common share:
Net income (loss) per share $
0.01
$ $
(0.04) $
(0.03)
Weighted average common shares outstanding 32,139,935 33,511,242 30,597,410 28,377,199
Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
March 31,
2025 2024
Cash flow from operating activities:
Net loss $
(1,094,760) $
(965,370)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 930,341 525,267
Stock options expense 146,751 104,502
Restricted common stock expense 1,400,199 1,603,820
Modification cost of accelerated vesting of restricted common stock 20,949
Adjustment to contingent earnout liability 2,812,796 (268,287)
Changes in operating assets and liabilities:
Accounts receivable (754,258) (739,883)
Prepaid expenses and other current assets 17,826 (156,026)
Prepaid royalties 311,938 197,888
Accounts payable and accrued expenses (338,502) 498,584
Deferred revenue 1,331,920 768,347
Net cash provided by operating activities 4,764,251 1,589,791
Cash flow from investing activities:
Purchase of property and equipment (11,571) (57,761)
Payment for acquisition of Resolute, net of cash acquired (2,718,253)
Payment for acquisition of Scite, net of cash acquired (7,305,493)
Net cash used in investing activities (11,571) (10,081,507)
Cash flow from financing activities:
Common stock repurchase (908,393) (522,024)
Payment of contingent acquisition consideration (91,174) (314,960)
Net cash used in financing activities (999,567) (836,984)
Effect of exchange rate changes (1,137) 4,791
Net increase (decrease) in cash and cash equivalents 3,751,976 (9,323,909)
Cash and cash equivalents, beginning of period 6,100,031 13,545,333
Cash and cash equivalents, end of period $
9,852,007 $
4,221,424
Supplemental disclosures of cash flow information:
Cash paid for income taxes $
74,816 $
82,049
Non-cash investing and financing activities:
Contingent consideration accrual on asset acquisition $
29,394 $
36,130
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SOURCE Research Solutions, Inc.
