13.09.2023 22:05:00

Research Solutions Announces Fiscal Fourth Quarter and Full Year 2023 Results

Reports Full-Year GAAP Net Income, Record Adjusted EBITDA and 28% Increase in Platform Revenue

HENDERSON, Nev., Sept. 13, 2023 /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 fourth quarter and full year ended June 30, 2023.

(PRNewsfoto/Research Solutions, Inc.)

Fiscal Fourth Quarter 2023 Summary

  • Total revenue increased 16% to $10.0 million
  • Platform revenue up 22% to $2.3 million; Annual recurring revenue up 19% to $9.4 million
  • Gross profit up 19% to the prior-year quarter; Total gross margin improved 110 basis points to 39.4%
  • Net income of $375,746 or one cent per diluted share, compared to a net loss of ($438,267) or one cent per share in the prior-year quarter
  • Adjusted EBITDA of $825,087 compared to ($121,327) in the same period a year ago
  • Cash flow from operations of $1.5 million compared to slightly negative cash flow in the prior-year quarter

Full-Year Fiscal 2023 Summary

  • Total revenue increased 14% to $37.7 million
  • Platform revenue of $8.7 million, a 28% increase, with a 14% increase in total deployments to 835
  • Total gross margin increased 250 basis points to 39.0%
  • Net income of $0.6 million, or $0.02 per diluted share, compared to a net loss of $1.6 million or  ($0.06) per share in the prior year
  • Adjusted EBITDA of $2.0 million compared to ($0.4 million) in the previous year
  • Cash flow from operations of $3.4 million, compared to ($0.4 million) in the previous year

Items Subsequent to End of Fiscal 2023

  • Acquired ResoluteAI, a developer of advanced search and discovery tools
  • Engaged Jeremy Murphy as an advisor and observer to the Board of Directors

"Fiscal year 2023 was an exciting year for our business.  Our results represent the significant progress made across our organization, highlighted by our highest annual organic revenue growth in more than a decade and first year of GAAP profitability since fiscal 2015," said Roy W. Olivier, President and CEO of Research Solutions. "Our customers continue to recognize the greater efficiency and cost savings offered through our Article Galaxy platform and our recent acquisition of ResoluteAI expands these offerings and capabilities, providing us with meaningful cross-selling opportunities.  While we continue to see headwinds in the platform business, we are optimistic about our fiscal year 2024 and look to continue to grow the business organically as well as through strategic M&A."

Fiscal Fourth Quarter 2023 Results

Total revenue increased 16% to $10.0 million, compared to $8.6 million in the same year-ago quarter.

Platform subscription revenue increased 22% to $2.3 million compared to approximately $1.9 million in the year-ago quarter. The increase was primarily due to an increase in upsell activity within our existing customer base and an increase in the total number of paid Platform deployments, including 20 added in the quarter. The quarter ended with annual recurring revenue of $9.4 million, up 4% sequentially and 19% year-over-year (see the company's definition of annual recurring revenue below).

Transaction revenue was up 15%, increasing to $7.7 million, compared to $6.7 million in the fourth quarter of fiscal 2022. Transaction customers count for the quarter was 1,404, compared to 1,213 customers in the prior year quarter (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 39.4%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were approximately $3.7 million, a $62,000 decrease from the fourth quarter of 2022. The decrease was primarily due to lower sales and marketing expenses.

Net income in the fourth quarter was $376,000, or one cent per diluted share, compared to a net loss of ($438,000), or two cents per share, in the prior-year quarter. Adjusted EBITDA was $825,000, compared to ($121,000) in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

Full-Year Fiscal 2023 Results

Total revenue increased 14% to $37.7 million, compared to $32.9 million in fiscal 2022.

Platform subscription revenue was $8.7 million, a 28% increase over the prior year. The increase was due to upselling current platform customers and an increase in the total number of paid Platform deployments.

Transaction revenue was $29.0 million, an 11% increase compared to the previous year. The increase is primarily due to organic growth and also the acquisition of certain customer contracts from FIZ Karlsruhe which became effective in the third quarter of fiscal 2023.

Total gross margin improved 250 basis points over the prior year to 39.0%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $14.5 million compared to $13.7 million in the prior year. The increase was primarily due to higher stock compensation expense related to the transition to a new program that the Company views as better aligned with shareholders' interests.

Net income for fiscal year 2023 was $572,000, or $0.02 per diluted share. Net loss in fiscal 2022 was $1.6 million, or ($0.06) per share. Adjusted EBITDA for fiscal 2023 was a positive $2.0 million, compared to a negative $374,000 in the prior year (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

Cash and cash equivalents on June 30, 2023, amounted to $13.5 million compared to $10.6 million as of June 30, 2022. 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 Roy W. Olivier and CFO Bill Nurthen will host the conference call, followed by a question and answer period.

Date: Wednesday, September 13, 2023
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-412-317-5180
Conference ID: 10182138

The conference call will be broadcast live and available for replay until October 13, 2023, by dialing 1-412-317-6671 and using the replay ID 10182138, 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,



2023

2022

Change

% Change

Revenue:






Platforms

$ 2,303,375

$ 1,886,845

$     416,530

22.1 %


Transactions

$ 7,656,342

$ 6,675,164

981,178

14.7 %

Total Revenue

9,959,717

8,562,009

1,397,708

16.3 %






Gross Profit:






Platforms

2,028,265

1,646,631

381,634

23.2 %


Transactions

1,892,278

1,636,511

255,767

15.6 %

Total Gross Profit

3,920,543

3,283,142

637,401

19.4 %






Gross profit as a % of revenue:






Platforms

88.1 %

87.3 %

0.8 %



Transactions

24.7 %

24.5 %

0.2 %


Total Gross Profit

39.4 %

38.3 %

1.0 %







Operating Expenses:






Sales and marketing

455,030

691,368

(236,338)

-34.2 %


Technology and product development

991,093

1,049,430

(58,337)

-5.6 %


General and administrative

1,649,333

1,663,671

(14,339)

-0.9 %


Depreciation and amortization

22,163

5,507

16,656

302.5 %


Stock-based compensation

585,384

225,501

359,883

159.6 %


Foreign currency translation loss

(37,743)

91,279

(129,022)

NM

Total Operating Expenses

3,665,260

3,726,756

(61,497)

-1.7 %

Income (loss) from operations

255,283

(443,614)

698,897

157.5 %






Other Income (Expenses):






Other income (expense)

120,522

6,377

114,145

NM


Provision for income taxes

(59)

(1,030)

971

-94.3 %

Total Other Income (Expenses):

120,463

5,347

115,116

NM

Net income (loss)

$     375,746

$   (438,267)

814,013

185.7 %






Adjusted EBITDA

$     825,087

$   (121,327)

$     946,414

NM









Quarter Ended June 30,



2023

2022

Change

% Change

Platforms:






ARR (Annual recurring revenue):






  Beginning of Period

$ 9,107,681

$ 7,348,847

$ 1,758,834

23.9 %


   Incremental ARR

336,449

573,341

(236,892)

-41.3 %


  End of Period

$ 9,444,130

$ 7,922,188

$ 1,521,942

19.2 %







Deployments:






  Beginning of Period

815

680

135

19.9 %


   Incremental Deployments

20

53

(33)

-62.3 %


  End of Period

835

733

102

13.9 %







ASP (Average sales price):






  Beginning of Period

$       11,175

$       10,807

$             368

3.4 %


  End of Period

$       11,310

$       10,808

$             502

4.6 %






Transaction Customers:






Corporate customers

1,090

920

170

18.5 %


Academic customers

314

293

21

7.2 %


Total customers

1,404

1,213

191

15.7 %

Fiscal Full Year Financial and Operational Summary Tables vs. Prior-Year



Twelve Months Ended June 30,



2023

2022

Change

% Change

Revenue:






Platforms

$   8,683,246

$   6,787,772

$  1,895,474

27.9 %


Transactions

$ 29,020,206

$ 26,146,380

2,873,826

11.0 %

Total Revenue

37,703,452

32,934,152

4,769,300

14.5 %






Gross Profit:






Platforms

7,655,960

5,851,183

1,804,777

30.8 %


Transactions

7,044,931

6,168,491

876,440

14.2 %

Total Gross Profit

14,700,891

12,019,674

2,681,217

22.3 %






Gross profit as a % of revenue:






Platforms

88.2 %

86.2 %

2.0 %



Transactions

24.3 %

23.6 %

0.7 %


Total Gross Profit

39.0 %

36.5 %

2.5 %







Operating Expenses:






Sales and marketing

2,285,478

2,276,172

9,306

0.4 %


Technology and product development

3,742,192

3,711,085

31,107

0.8 %


General and administrative

6,654,012

6,406,400

247,612

3.9 %


Depreciation and amortization

52,649

17,651

34,998

198.3 %


Stock-based compensation

1,849,906

1,096,384

753,522

68.7 %


Foreign currency translation loss

(121,953)

143,898

(265,851)

NM

Total Operating Expenses

14,462,284

13,651,590

810,694

5.9 %

Income (loss) from operations

238,608

(1,631,916)

1,870,523

114.6 %






Other Income (Expenses):






Other income (expense)

338,617

7,154

331,463

NM


Provision for income taxes

(5,602)

(7,622)

2,020

-26.5 %

Total Other Income (Expenses):

333,015

(468)

333,483

NM

Net income (loss)

$       571,623

$  (1,632,384)

2,204,006

135.0 %






Adjusted EBITDA

$   2,019,210

$     (373,983)

$  2,393,192

NM









Twelve Months Ended June 30,



2023

2022

Change

% Change

Platforms:






ARR (Annual recurring revenue):






  Beginning of Period

$   7,922,188

$   5,880,179

$  2,042,009

34.7 %


   Incremental ARR

1,521,942

2,042,009

(520,067)

-25.5 %


  End of Period

$   9,444,130

$   7,922,188

$  1,521,942

19.2 %







Deployments:






  Beginning of Period

733

553

180

32.5 %


   Incremental Deployments

102

180

(78)

-43.3 %


  End of Period

835

733

102

13.9 %







ASP (Average sales price):






  Beginning of Period

$         10,808

$         10,633

$              175

1.6 %


  End of Period

$         11,310

$         10,808

$              502

4.6 %






Transaction Customers:






Corporate customers

1,012

886

126

14.2 %


Academic customers

304

299

5

1.6 %


Total customers

1,316

1,185

131

11.1 %

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,



2023

2022

Change

% Change

Net Income (loss)

$     375,746

$   (438,267)

$     814,013

185.7 %

 Add (deduct):






Other income (expense)

(120,522)

(6,377)

(114,145)

NM


Foreign currency translation loss

(37,743)

91,279

(129,022)

-141.3 %


Provision for income taxes

59

1,030

(971)

-94.3 %


Depreciation and amortization

22,163

5,507

16,656

302.5 %


Stock-based compensation

585,384

225,501

359,883

159.6 %

 Adjusted EBITDA

$     825,087

$   (121,327)

$     946,414

NM

 



Twelve Months Ended June 30,



2023

2022

Change

% Change

Net Income (loss)

$       571,623

$  (1,632,384)

$  2,204,006

135.0 %

 Add (deduct):



-



Other income (expense)

(338,617)

(7,154)

(331,463)

NM


Foreign currency translation loss

(121,953)

143,898

(265,851)

-184.7 %


Provision for income taxes

5,602

7,622

(2,020)

-26.5 %


Depreciation and amortization

52,649

17,651

34,998

198.3 %


Stock-based compensation

1,849,906

1,096,384

753,522

68.7 %

 Adjusted EBITDA

$   2,019,210

$     (373,983)

$  2,393,192

NM

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 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 product offerings and cross-selling opportunities, ,  management's optimistic outlook for fiscal 2024, 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, 



2023


2022

Assets







Current assets:







Cash and cash equivalents


$

13,545,333


$

10,603,175

Accounts receivable, net of allowance of $85,015 and $94,144, respectively



6,153,063



5,251,545

Prepaid expenses and other current assets



400,340



276,026

Prepaid royalties



1,202,678



846,652

Total current assets



21,301,414



16,977,398








Other assets:







Property and equipment, net of accumulated depreciation of $881,908
and $840,996, respectively



70,193



47,985

Intangible assets, net of accumulated amortization of $747,355 and $723,036,
respectively



462,068



Deposits and other assets



1,052



893

Total assets


$

21,834,727


$

17,026,276








Liabilities and Stockholders' Equity







Current liabilities:







Accounts payable and accrued expenses


$

8,079,516


$

6,604,032

Deferred revenue



6,424,724



5,538,526

Total current liabilities



14,504,240



12,142,558








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; 29,487,508 and
27,075,648 shares issued and outstanding, respectively



29,487



27,076

Additional paid-in capital



29,941,873



28,072,855

Accumulated deficit



(22,522,649)



(23,094,272)

Accumulated other comprehensive loss



(118,224)



(121,941)

Total stockholders' equity



7,330,487



4,883,718

Total liabilities and stockholders' equity


$

21,834,727


$

17,026,276

 

Research Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations and Other Comprehensive Loss










Years Ended



June 30, 



2023


2022








Revenue:







Platforms


$

8,683,246


$

6,787,772

Transactions



29,020,206



26,146,380

Total revenue



37,703,452



32,934,152








Cost of revenue:







Platforms



1,027,286



936,589

Transactions



21,975,275



19,977,889

Total cost of revenue



23,002,561



20,914,478

Gross profit



14,700,891



12,019,674








Operating expenses:







Selling, general and administrative



14,409,634



13,633,939

Depreciation and amortization



52,649



17,651

Total operating expenses



14,462,283



13,651,590








Income (loss) from operations



238,608



(1,631,916)








Other income



338,617



7,154








Income (loss) from operations before provision for income taxes



577,225



(1,624,762)

Provision for income taxes



(5,602)



(7,622)








Net income (loss)



571,623



(1,632,384)








Other comprehensive income (loss):







Foreign currency translation



3,717



(2,364)

Comprehensive income (loss)


$

575,340


$

(1,634,748)








Basic income (loss) per common share:







Net income (loss) per share


$

0.02


$

(0.06)

Weighted average common shares outstanding



26,860,761



26,422,295








Diluted income (loss) per common share:







Net income (loss) per share


$

0.02


$

(0.06)

Weighted average common shares outstanding



29,139,759



26,422,295

 

Research Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows










Years Ended



June 30, 



2023


2022








Cash flow from operating activities:







Net income (loss)


$

571,623


$

(1,632,384)

Adjustment to reconcile net income (loss) to net cash provided by (used in)
operating activities:







Depreciation and amortization



52,649



17,651

Fair value of vested stock options



375,189



470,615

Fair value of vested restricted common stock



1,418,718



557,496

Fair value of vested unrestricted common stock



68,272



Modification cost of stock options



56,000



Changes in operating assets and liabilities:







Accounts receivable



(901,518)



(534,092)

Prepaid expenses and other current assets



(124,314)



(5,774)

Prepaid royalties



(356,026)



58,269

Accounts payable and accrued expenses



1,337,056



(83,156)

Deferred revenue



886,198



734,175

Net cash provided by (used in) operating activities



3,383,847



(417,200)








Cash flow from investing activities:







Purchase of property and equipment



(47,209)



(44,288)

Payment for non-refundable deposit for asset acquisition



(297,450)



Net cash used in investing activities



(344,659)



(44,288)








Cash flow from financing activities:







Proceeds from the exercise of stock options



57,500



97,688

Proceeds from the exercise of warrants





59,500

Common stock repurchase



(104,250)



(93,918)

Payment of contingent acquisition consideration



(50,509)



Net cash provided by (used in) financing activities



(97,259)



63,270








Effect of exchange rate changes



229



(2,944)

Net increase (decrease) in cash and cash equivalents



2,942,158



(401,162)

Cash and cash equivalents, beginning of period



10,603,175



11,004,337

Cash and cash equivalents, end of period


$

13,545,333


$

10,603,175








Supplemental disclosures of cash flow information:







Cash paid for income taxes


$

5,602


$

7,622








Non-cash investing and financing activities:







Contingent consideration accrual on asset acquisition


$

138,428


$

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SOURCE Research Solutions, Inc.

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